Rubicon is recommending shareholders do not accept a partial takeover bid after an independent valuation found the offer is too low.
US-based Knott Partners has a 18.5% stake in Rubicon and wants to lift its stake to just over 27%. It is offering 70 cents per share, a premium of 27%.
Rubicon says it does not oppose Knott Partners lifting its stake, but their offer price is too low.
Independent valuer Grant Samuel says Rubicon is worth between $1.15 and $2.26 per share and the takeover bid does not reflect the influence Knott Partners would have over the company.
It also says the offer underscores potential returns from investments in the US-based wood products company, Tenon, and biotech company, ArborGen.
But Grant Samuel acknowledges some investors might not want to wait to see if Rubicon's investments fulfill their promise.
Excluding Knott Partners, Grant Samuel says five investors hold 60% of Rubicon - these institutional shareholders will determine the outcome.
Because the proposal is for less than half of Rubicon, Knott must get majority shareholder approval under takeover rules.
It remains to be seen whether institutional shareholders will follow the board's recommendation or use the 70 cents per share offer as a timely exit.