Michael Green, the former Carlton chief, emerged yesterday as the mystery bidder for the printing group St Ives.
His Aim-listed Tangent Communications group confirmed market speculation by saying it had approached the St Ives board with offer proposals valuing the group at just over £280m. But St Ives swiftly rejected the move, saying the proposal "significantly undervalues the company and its prospects".
However, directors agreed to receive a presentation from Tangent "so as to understand more fully their proposal".
Mr Green will have to make a strong case to convince the board at St Ives, printer of the Harry Potter books. In their rejection statement, directors described the approach as "a non-binding, highly conditional, indicative proposal from Tangent, an Aim-quoted company with a market capitalisation of around £17m".
The terms, which Tangent claims to be worth 272.5p a share, value St Ives at £282m, and include a cash element of 200p a share. The balance would be made up by new Tangent equity.
St Ives said the combined group would have net debt of £160m and existing St Ives shareholders would hold only 41% of the equity of the enlarged company. It advised shareholders to take no action.
It is understood Tangent has already held talks with St Ives shareholders, including Silchester, which has around 20% of the shares.
Tangent said the proposed offer would be financed by a combination of new institutional investors in Tangent and increased debt in the enlarged group. Mr Green, who owns 45% of Tangent, said he would make a further "significant investment" alongside other new equity investors.
He would be chairman of the enlarged company and give the chief executive post to Charles Skinner, currently the chief executive of Brandon Hire, which was sold earlier this year to Wolseley.
"Tangent has significant experience in the growth areas of digital printing and marketing services," said Mr Skinner.
"There is clear logic in combining St Ives with Tangent and repositioning the enlarged group away from being a pure printing business towards becoming a third-party marketing and printing partner for its expanded customer base."
St Ives saw its shares tumble last month after it revealed serious accounting errors at one of its divisions. The shares closed down 1.25p at 248.25p last night. Tangent shares were unchanged at 15.25p.