Rank Group has advised shareholders to reject a 150 pence a share takeover bid from Guoco Group Ltd, its largest investor, saying it undervalues the company. An offer for £586 million was made for the Rank Group, the parent company of Mecca Bingo and Grosvenor Casinos.

The Malaysian tycoon Quek Leng Chan is behind the bid with Guocco, which is part of the Hong Leong conglomerate, offering to buy the remainder of the shares it does not own in the Rank Group for 150p a share.

The 150 pence a share offer represents a 0.8 percent premium to Rank's closing price on Friday of 148.8 pence and values the firm at about 586 million pounds ($960.5 million).

"The board has considered the offer and believes that it significantly undervalues Rank and its prospects and, as a result, recommends that shareholders do not accept it," Rank said in a statement, noting that Guoco has reiterated its support for Rank and its management team.

Report suggest that the bid is not hostile and that "Guoco supports the Rank management team,"

Guoco added in a statement that: "The increased stake in Rank is consistent with Guoco's ongoing strategy of investing inmarket leaders in the global leisure sector."

Shares in the Rank Group increased 1.9p to 148.8p in the short period of time between the announcement and the closing of the London stock market.

Guoco already owen a 29.3 percent of the Rank Group already and has built up the stake over a number of years. On Friday the company acquired a further 11.6 percent stake in Rank, increasing its shareholding to 40.8 percent and triggering a mandatory takeover offer.