French firm Oberthur has stepped up the pressure on takeover target De La Rue, claiming the British bank note maker recently lost out on a major order from a key customer.
Last month, De La Rue's management rejected Oberthur's takeover offer of 905 pence a share, or nearly £900 million, claiming it significantly undervalued the company.
However, in a statement confirming the offer still stands, Oberthur says the value takes into consideration risks associated with De La Rue's precarious relationship with a major client, widely understood to be the Reserve Bank of India.
The RBI concerns revolve around revelations that in July De La Rue was forced to suspended production at a Hampshire plant over "quality and production irregularities". It then called in the Serious Fraud Office after establishing that staff "deliberately falsified" paper specification test certificates on banknotes believed to be destined for India.
In a trading update in November the company warned its production problems could lead to the loss of a top customer, knocking its shares to a four-year low.
Oburther now says it "has reason to believe that the most recent tender for the supply of 16,000 tons of currency paper by the Reserve Bank of India has been awarded to four competitors of De La Rue".
The suitor is calling on its quarry to inform the market about its role in the tender and "provide a full update to its shareholders as to its realistic prospects of obtaining new business from this very important customer".
Oberthur claims "De La Rue has suffered damage to its reputation as a consequence of such recent events, and that the ability of De La Rue to win new profitable contracts and retain existing customers as a standalone business has been undermined".
Jean-Pierre Savare, president, Oberthur, says: "We believe there are crucial questions that need answering from De La Rue in relation to India and the status of De La Rue's relationships with its existing customers, in the light of the continuing uncertainty surrounding the company and its future prospects. We are extremely serious in making our approach and we believe a combination of De La Rue and Oberthur would provide the catalyst for restoring De La Rue's standing and reputation, and help De La Rue deliver the high quality production and service that customers demand."
In a brief statement, De La Rue chairman Nicholas Brookes responds: "Outside of the well-publicised paper production issues with a major banknote paper customer, which we first announced in July 2010, De La Rue continues to enjoy encouraging order levels which are at comparable levels to the equivalent period last year."
Shares in the firm are trading at 832.5 pence in morning trading.