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Symbion Health says it will reject a A$2.65 billion ($3.2 billion) takeover offer from Primary Health Care.
Primary, a major shareholder with a 20 per cent stake, is offering A$4.10 cash for each share in the company that it does not already own.
"We will be making a further statement this evening rejecting the [Primary] offer," Symbion managing director Robert Cooke said.
"We've waited a long time for the offer and welcome their all-cash bid, but at the end of the day we are disappointed at A$4.10 and disappointed that it contains a lot of detailed conditions.
"And it doesn't adequately compensate the shareholders for the strategic value [of Symbion] to Primary."
Cooke said the Primary offer for Symbion "looked like a good deal for Primary shareholders".
Symbion has already agreed to a rival takeover proposal from private hospitals operator Healthscope.
Under that proposal, Healthscope plans to buy Symbion's diagnostics assets in a scrip deal worth A$1.6 billion and assume about A$900 million of Symbion debt.
Private equity firms Ironbridge Capital and Archer Capital would take Symbion's consumer and pharmacy services businesses for A$1.15 billion in cash.
Healthscope and Symbion have said the two-pronged proposal gave Symbion an implied value of between A$4.23 and A$4.43 a share.
Primary says that valuation is based on flawed assumptions, and Primary has indicated it will vote against the deal when it is put to a shareholder vote on November 30.
"This is not Coles [retailer Coles Group]. This business is going well," Cooke said.
"A$4.10 for a business that was travelling well and continues to travel well ... is not enough.
"I can't see how we could consider A$4.10 when we believe the company's worth more than A$4.10."
Symbion chief financial officer Mark Hooper said that under the Healthscope offer, Symbion shareholders could get rollover relief - this was subject to ruling by the Australian Taxation Office - and also benefits from Healthscope taking part in industry consolidation.
Hooper said that under the Primary offer, Symbion shareholders would pay a full tax on their proceeds and that any benefit from industry consolidation would accrue to Primary shareholders.
- AAP
