Software company Gladstone has written to its shareholders urging them to ignore a hostile takeover bid by a Canadian rival.

In a statement, bosses at the Wallingford-based firm said the offer of 25p a share from Constellation Software “undervalues the company and its future growth potential.”

The company, which employs about 80 people in Wallingford, supplies membership systems to leisure centre across the UK, including the Vale of White Horse and South Oxfordshire.

It has been expanding into education, providing schoolchildren with smart cards and fingerprint systems in a bid to curb truancy and encourage healthy eating.

It added: “The timing of the offer is opportunistic both in terms of the substantial investment that Gladstone has made in the development of new products, which has not yet been reflected in Gladstone's trading performance and with the world’s stock markets at an historic low.

“The offer terms fail to take account of Gladstone’s robust business structure, market leadership, the quality of its products and investments in a new technology platform which will enable expansion across several new and existing markets and the future prospects in both the health and Leisure and education markets.”

Constellation made the offer worth £8.98m earlier this month. It already owns 13.86 million shares in Gladstone representing almost 29 per cent of the company’ s share capital.

Mark Leonard, president of Constellation, said: “We believe the offer represents an attractive premium over recent trading levels. Gladstone’s strong presence in the UK leisure centre market combined with CSI’s management expertise creates an attractive investment opportunity.”

The Gladstone board will write to shareholders in the next 14 days setting out the full reasons for its rejection of the offer together with the preliminary results for the year ended August 31.