Horizon Energy Distribution is recommending shareholders reject a partial takeover offer by Marlborough Lines, saying it's too low.
The community-owned energy company is offering $3.96 per share for 51% of Horizon, valuing the company at $99 million.
Horizon chairman Rob Tait has told shareholders that the price is at the bottom of the valuation range given by an independent adviser, who thinks the shares are worth between $3.96 to $4.68.
Mr Tait says Marlborough Lines' offer does not appreciate the value of the company and its potential growth, and would give Marlborough Lines the power to control the composition of the board.
If the offer is accepted, he says shareholders will be left with significantly smaller and potentially less liquid holdings, which could trade at a lower price.
The Eastern Bay Energy Trust holds 77.29% of Horizon's shares, and the offer can't succeed unless the trust accepts it to some extent.
Mr Tait says Horizon's directors have urged the trust to advise its intentions well before the offer closes on 31 October, so other shareholders can decide what to do.
