Mike Ashley’s Sports Direct International Plc said on Monday it will offer to buy Hyde, Greater Manchester-based Findel plc in a deal that values the online retail and education business at £139.2 million.

Findel rejected the bid, saying it “significantly undervalues the group and its future prospects …”

Sports Direct, already Findel’s largest shareholder, said it will offer to buy the shares it does not already hold for 161p per share, a 1p discount to Findel’s closing price on Friday.

However, Findel shares rose about 7.5% on the news to around 174p, suggesting Sports Direct may have to increase its offer.

“Sports Direct International plc has today unconditionally agreed to acquire 6,000,000 Findel Shares at a price of 161 pence per Findel Share from a single shareholder, City Financial Absolute Equity Fund,” said Sports Direct.

“It is expected that the acquisition will settle on 6 March 2019.

“Following the acquisition Sports Direct will, in aggregate, hold 31,850,000 Findel Shares, representing 36.8 per cent. of the existing issued share capital, and voting rights, of Findel. “

As a result of the acquisition, under Rule 9 of the Takeover Code, Sports Direct is required to make a mandatory cash offer for the Findel shares not already held by Sports Direct (or any persons acting in concert with it), at a price of 161 pence per Findel Share (such price being no less than the highest price paid by Sports Direct (or any persons acting in concert with it) for any Findel Share during the 12 months prior to the date of this announcement).”

Findel said in a statement: “The board believes that the mandatory offer significantly undervalues the group and its future prospects and is unanimous in its rejection of the offer of 161 pence per share and recommends that shareholders should take no action at this time.

“The board will be writing to shareholders with its formal response to the offer once the offer document has been posted. Further announcements will be made as and when appropriate.”