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Private equity firm Nordic Capital offered 1.11 billion euros ($1.75 billion) for top Nordic IT services TietoEnator on Thursday, but the company said the bid was too low.
Nordic Capital said it would make the unsolicited cash offer of 15.50 euros for the Swedish-Finnish firm through its fully-owned investment vehicle Cidron Services.
Shares in TietoEnator, which had closed at 11.27 euros on Wednesday, jumped more than 40 percent to 15.91 euros after the company said at first glance the offer was too low, not reflecting true value of the company.
"The offered price is low. In our opinion the right price would be over 20 euros," said Carnegie analyst Janne Rantanen.
The company has long been seen as a takeover target, but it was not clear if a bidding war would ensue.
"(A) rival bid is possible, but it is unlikely in this market situation," said Glitnir analyst Pasi Vaisanen.
Cidron, which already has a 4.4 percent stake in TietoEnator, said the offer would run from April 2 to April 28.
"We are talking about an offer to the shareholders which has a very good premium," Robert Furuhjelm, Director of Cidron Services and Partner at Nordic Capital, told Reuters.
TietoEnator is in the midst of a large restructuring program, aiming to cut annual costs by more than 100 million euros as it tries to fight mounting competition and falling profits.
Its earnings per share from continuing operations fell to 0.29 euros last year from 1.18 euros a year before.
"The company's operations are independent of who owns it. We have a good restructuring program ongoing," TietoEnator's Chief Executive Hannu Syrjala told Reuters.
Nordic Capital said it aims to delist TietoEnator and name Harri Koponen, formerly chief executive of Finnish telecoms group Sonera and Kuwaiti National Mobile Telecommunications, as its executive chairman.
"We believe that TietoEnator has an attractive position as a market leader in the Nordic region with an impressive customer base," Koponen said in a statement.
The company's customers include Nokia and Ericsson . It competes against global rivals such as IBM [IBM
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