Manufacturing buyout firm Melrose has seen a £1.3 billion offer for a rival dismissed as “opportunistic”.

Alcester-based Melrose (MRO) saw the bid rejected by Charter International (CHTR) after the Irish industrial tools-maker said it undervalued the company, which is grappling with falling sales and management issues.

Charter said in a statement “The board of Charter reviewed the proposal with its advisers and rejected it.

“The offer is opportunistic and substantially undervalues the company and its prospects.”

Melrose, which aims to buy underperforming industrial businesses and sell them after restructuring, said on Wednesday it is looking at paying 780 pence per share for Charter, in a mixture of cash and stock.

FTSE 250-listed Charter stock has dropped sharply over the last two months amid problems at its core unit and the subsequent resignation of its chief executive Michael Foster, which analysts say has left the company vulnerable to a buyout.

The move comes after Melrose, which looks to buy underperforming industrial businesses and sell them after restructuring, agreed the £360 million sale of precision die casting business Dynacast just weeks ago.

Shares in Charter – which recently dipped to 596p after a profits warning – soared by more than a quarter in early trading after the announcement, to as high as 796p.

Melrose previously said in a statement “Any offer for Charter by Melrose, if made, would consist of a mix of cash and share consideration. However, Melrose would like to emphasise that there can be no certainty that an offer for Charter will be forthcoming.”