Shares in infrastructure and maintenance firm Transfield Services have risen sharply after it rejected a $1 billion takeover bid from Spanish building giant Ferrovial.
Transfield shares shot up by more than 30 per cent in morning trade after it detailed the $1.95-a-share offer on Monday.
The offer from Ferrovial represents a 30 per cent premium to the $1.50 Transfield's shares last traded at on Friday.
But IG Markets strategist Evan Lucas said shareholders shouldn't accept anything less than $2.10 a share.
"Once you start seeing a company like this having a takeover, there is always that chance that there becomes a bidding war," he said.
But Mr Lucas pointed out how Transfield had debt issues and was trading well below its pre-global financial crisis share price of above $10 in late 2007.
"It has been in a fairly downward spiral for quite a while," he said.
"Their earning stream over the last two years has been indifferent."
Shares in Transfield ended the day 40 cents higher, or 26.7 per cent, at $1.90.
Transfield chairman Diane Smith-Gardner said the company's board believed Ferrovial's offer undervalued the company.
"The board of Transfield Services has considered Ferrovial's proposal with the company's advisers and has formed the view that the price of $1.95 per share does not reflect the underlying value of Transfield Services shares," she said.
But Transfield said it would hold discussions with Ferrovial to determine whether a better offer could be put forward.
It is also offering to provide the Spanish predator with limited access to its books.
Ferrovial, set up in 1952 as a railroad construction company, has a leading share in London's Heathrow airport.
Last week it announced it would buy two airports in Scotland and another in England with Australia's Macquarie Group for STG1.048 million ($A1.91 million).
The original Transfield company was founded in 1956 by Italian migrant Franco Belgiorno-Nettis, who died in an accident in Italy in 2006.
Transfield Holdings, a separate private company with a stake in the Sydney Harbour Tunnel, last month sold its 11.3 per cent holding in Transfield Services.
The Belgiorno-Nettis family simultaneously sold their 0.4 per cent interest in Transfield Services.