Transfield rejects takeover offer

"The board of Transfield Services has considered Ferrovial's proposal with the company's advisers and has formed the view that the new price of $2.00 per share still does not reflect the underlying value of Transfield Services shares," chairman Diane Smith-Gander said in a statement to the stock exchange.

The original bid made two months ago was priced at $1.95 a share.

"Shareholders do not need to take any action in response to the latest Ferrovial proposal," the statement said, adding that "Transfield Services is not expecting any further engagement with Ferrovial at this stage".

The latest news follows an announcement last month that Ferrovial would have until the end of February to do due diligence on Transfield after it signed a confidentiality agreement following its spurned $1 billion indicative takeover bid.

The agreement included a standstill clause that prevents Ferrovial from trading in Transfield's shares until February 28. After that date, Ferrovial can take an offer directly to shareholders.

Ferrovial had initially offered $1.95 per share for Transfield in October, but the Australian company rejected the bid as too low. The original bid pushed Transfield's shares up more than 25 per cent.

The $1.95 per share cash offer made public on October 20 was a 30 per cent premium to Transifled's close on the previous trading day. At the time, Ferrovial, which has a market cap capitalisation of €11.27 billion ($16.9 billion), said it didn't require additional funding to fund the purchase.

Transfield's share price has now almost doubled since the start of the year. Chief executive Graeme Hunt returned the company to a profit after winning a $1.2 billion contract with the federal government to provide security and catering services on Nauru and Manus islands.

Transfield's shares closed at $1.79 on Friday, more than double the 52-week low touched in February of 75 cents a share.