MADRID (Reuters) - The board of Spanish low-cost airline Vueling on Thursday recommended that shareholders reject a takeover offer from International Airline Group (ICAG.L) (ICAG.MC), saying it does not reflect the company's value.
IAG, which already owns 45.85 percent of Vueling as well as British Airways and Iberia, offered in November to buy the rest of the company in a bid to stem losses in Spain and shake up its short-haul business in the country.
The offer of 7 euros per share represented a 28 percent premium at the time, but the share price of Vueling has since soared as the Barcelona-based carrier's market share in Spain grew and it posted a 300 percent jump in 2012 net profit.
Shares of Vueling, Spain's second largest carrier by passenger numbers, closed at 7.85 euros on Thursday.
In a statement to the Spanish stock market regulator, the members of the board said the offer of 7 euros per share did not reflect the value of the company.
"The price offered, which supposed a 27.97 percent premium when it was announced, has been surpassed in such a way that the trading price is now higher than the offer, with no premium for the increased control," the board said.
It also said that an average estimate from analysts as well as two audits carried out by external firms showed the airline had a higher value.
IAG said last month it had ruled out raising the 113 million euros ($148 million) bid, although it could waive the initial condition it set of a minimum acceptance of 90 percent of non-IAG shareholders.
Vueling shareholders have until April 8 to say whether they accept the offer or not.
Analysts believe IAG may want to use Vueling's low-cost base to help solve problems with Iberia, which plans to lay off 3,807 workers and cut salaries by 20 percent in what the airline calls "a fight for survival".
(Reporting by Julien Toyer; Editing by Leslie Adler)