Icelandic generic specialist Actavis has rejected a takeover bid from an investment firm led by its own chairman, saying that the offer is not a fair one.

Novator, the investment group which is led by billionaire and Actavis chairman Bjorgolfur Thor Bjorgolfsson, already holds approximately 38.5% of Actavis' A class shares and last month made a bid to get hold of the rest. The offer to all A class stockholders was 0.98 euros per share, which represented a 21% premium on the average price over the last six months, valuing the company at around 3.3 billion euros.

However, having reviewed the offer, the Icelandic firm’s board (excluding Mr Bjorgolfsson, plus two other executives Andri Sveinsson and Robert Wessman) says that it “does not believe the offer adequately reflects the fundamental value of Actavis or its future prospects”. The board added that it “does not consider the offer to be fair and does not recommend that shareholders accept it”.

Their opposition is based on “other factors in the offer in addition to the price offered to shareholders, such as the financing of the offer and the future plans for the company and its senior management.” This objection would appear to rest on Novator’s plans to take the firm private as the investment firm said in its original offer that such a move is necessary so that Actavis is “no longer restrained by the obligations and requirements which are placed on listed companies, including that of disclosure".

Novator had also stated that intends to finance a significant element of the transaction through debt funding, and added that it would seek to "adopt a more entrepreneurial and hence riskier approach to the company's operations, to cut the number of board members and have "significantly reduced public reporting responsibilities”.

The board added that it “continues to be open to discussions with Novator and will form an opinion on new offers if they are submitted” but there seems to be a major difference in philosophy. Actavis recently pulled out of the race to acquire the generics unit of Germany's Merck KGaA once the price rose to over 4.5 billion euros, saying it could not justify that amount to its shareholders as it would have led to burdensome debt levels.