July 6 (Reuters) - Belgian diaper maker Ontex has rejected a takeover approach from private equity firm PAI Partners, arguing the swoop was too low.
Ontex, which also makes feminine care and incontinence products, said on Friday that it had received an unsolicited and non-binding proposal from the French firm related to a possible cash offer for its outstanding shares.
"Having reviewed the proposal, the Ontex board of directors has unanimously rejected it on the basis that it significantly undervalued the Company," Ontex said in a statement.
Ontex's market value was 1.59 billion euros ($1.86 billion) as of Thursday's close, having fallen nearly 30 percent this year.
Hygiene products have strong long-term growth prospects because of ageing populations and growing emerging market wealth, but Ontex and rivals including Procter & Gamble and Kimberly-Clark in the United States and Essity of Sweden have all been hit by rising pulp prices at a time when intensified competition makes it harder to pass those costs on to customers.
In March Ontex said its results had also been hurt by disappointing results in its Brazilian business, which it acquired last year.
Ontex Chief Executive Charles Bouaziz serves on the supervisory board of PAI Partners. As a result, Ontex's board has not involved Bouaziz in discussions about the proposal and he has recused himself from the position at PAI for as long as is appropriate, the company said.
A spokesman for PAI Partners declined to comment.
Shares in Ontex were suspended on the Brussels Stock Exchange as of 0856 GMT.
Reporting by Alan Charlish in Gdynia and Martinne Geller in London; Editing by Thyagaraju Adinarayan and Kirsten Donovan