Network security firm Secure Computing has rejected an unsolicited buyout bid from rival CyberGuard, saying it did not believe it was in the best interest of shareholders.
The company turned down the one-for-one stock offer after consultations with its financial advisors and board of directors.
CyberGuard made the bid on Sunday, hoping that by combining the two companies, it could slash costs and capture more market share. At the time of the bid, CyberGuard's stock stood at $7.80 a share, making the offer worth about $277.5m (£148m).
CyberGuard said it was "disappointed in the initial response" by the board, but added that "we believe we have a high probability of raising cash that would make this transaction more compelling to the Secure Computing shareholders".
CyberGuard reiterated its belief that the proposed merger would lead to $14m in cost savings.
CyberGuard has been aggressive in filling out its portfolio through acquisitions over the last year and a half, scooping up VPN (virtual private network) acceleration provider NetOctave, as well SnapGear, which offers embedded Linux security and edge firewalls, and content security company Webwasher.
Scarlet Pruitt writes for IDG News Service