The board of directors of the PAS Group has recommended shareholders vote against a takeover bid, arguing it undervalues the company.

On September 22, US hedge fund, Coliseum Capital Partners, launched a takeover bid for PAS Group, which owns a portfolio of brands including Metalicus and Review.

The bid was launched through Australia Brands Investment (ABI) which is owned by Coliseum Capital Partners.

Coliseum already owns 19.23 per cent of the company and is offering 63 cents a share in a deal worth $86 million.

“ABI’s offer is materially inadequate and does not reflect the value of your PAS shares,” PAS Group chairman, Rod Walker, wrote in a letter to shareholders.

Walker went on to say the timing of the offer is opportunistic and fails to reflect the value of a number of initiatives and growth strategies that are well underway. “By accepting the offer you will lose the opportunity to participate in PAS’ expected future growth,” he wrote.

PAS is also courting higher takeover offers.

“Your directors are seeking to initiate discussions with a number of parties with a view to ascertaining their interest in making a competing offer for PAS. While there is no assurance that these discussions will lead to a superior proposal that your directors will recommend to PAS shareholders, if you accept ABI’s offer you will be unable to participate in any alternative superior proposal that may emerge.”

The offer closes on November 9 unless it is withdrawn earlier.