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The board of investor-developer Immofinanz has formally advised its shareholders to turn down a €422 mln bid by Austrian property company CA Immo and its Russian partner, 01 Group, for a 13.5% stake in its business.

In a statement, Immofinanz dismissed the offer of €2.80 per share as ‘inappropriate’. The valuation is slightly higher than the current share price of €2.76 on the Vienna Stock Exchange, but well below the EPRA NAV of €4.40 per share.

The board said: ‘The offer does not adequately consider the interests of all Immofinanz shareholders. In consideration of the current business activities and prospects for Immofinanz, the executive board has reached the conclusion that the offer price of €2.80 per share is inappropriate.’

The move was widely expected after Immofinanz last month condemned the offer as ‘ridiculous’ and ‘too low’. The Vienna and Warsaw-listed company has launched a €530 mln counter-bid for a 29% stake in CA Immo, which the latter described as an ‘emotional response’ to its own offer.

CA Immo and O1 Group have vowed to take legal action over comments Immofinanz CEO Eduard Zehetner made in a Profil magazine interview about the bid and warned him to ‘stop actions that interfere with our tender offer’.

Immofinanz, which owns five large shopping centres in Russia, argued its share price has been depressed by the ‘exceptional situation’ in the crisis-hit country and did not reflect its true worth.

In its advice to shareholders, the company noted that a successful bid would give CA Immo and O1 Group, who together already hold 3.3% of Immofinanz shares, a blocking minority on any resolutions which require the support of 75% of shareholders, such as capital measures under the exclusion of subscription rights.

Despite the bitter war of words, some market analysts still see a merger of the two companies, driven by 01 Group, which has a controlling interest in CA Immo, as the most likely outcome.

Georg Muzicant, CEO of Colliers International in Austria, told PropertyEU: ‘If 01 was to acquire a controlling stake in Immofinanz and merge it with CA Immo, it would create the largest company of its kind operating in the CEE region.’