The Quebec company's shares (TSX:CVT) popped after Gestion G. Aubert Ltd. disclosed that a leading NYSE-listed electrical contractor offered $1.95 per share, representing a 70 per cent premium.
Shares hit $1.50, their highest level in nearly two years, but were up 25 cents at $1.48 when trading was halted for the day.
Gestion G. Aubert, owned by Guy Aubert, is CVTech's second-largest shareholder with a 14 per cent stake in the company which provides various services to power utilities.
It said the unnamed contractor initially offered $1.65 per share on Jan. 30. The bid was increased the end of March, but was again rejected by CVTech.
Aubert said the offers were "significant" and should have been pursued by CVTech's board.
"At the very least, shareholders should have been informed and allowed to decide whether or not the company should be sold," Guy Aubert wrote in the letter to shareholders.
CVTech said the missive from Aubert — who resigned as a director on Jan. 24 — contained "erroneous and incomplete information."
After receiving an initial conditional and non-binding offer on Dec. 19, 2011, the company said it told the U.S. bidder that it would initiate a process to solicit competing offers. The company then withdrew its offer.
In 2012, the board initiated a review of strategic alternatives.
However, it said the process was "abruptly interrupted" due to a proxy fight initiated by Aubert at last year's annual meeting.
After it received another offer in January that included less favourable conditions, CVTech said it rejected the bid.
It said a third offer received included a price that was less than the valuation set by an independent committee to review strategic alternatives.
CVTech said the board then decided to focus on its business plan that included acquisitions to expand its geographic reach and expertise instead of "continuing to invest time and money in analyzing" insufficient proposals.
"The corporation's management is of the opinion that Mr. Aubert's recurring actions disrupt the board's efforts...and prevent it from carrying out its principal mandate to maximize shareholder value by internal growth and acquisitions," it stated after markets closed.
It added that Aubert's moves have affected employee morale and harmed the company's image.
Analyst Pierre Lacroix of Desjardins Capital Markets described the rejected bid as "positive" because it highlight the value embedded in CVTech's shares.
"Our thesis has been based on the fact that CVTech could create value by being a consolidator in the transmission and distribution, construction and maintenance space," he wrote in a report.
CVTech's stature in its core markets, especially in Quebec where it holds about one-third market share, makes the possibility of being a takeover target interesting for shareholders, Lacroix added.