Spotless on Monday issued a statement to the ASX recommending shareholders not accept the $1.15 share offer from Downer at the same time as revealing that talks with a potential rival bidder had fallen over.

Spotless branded the $1.2 billion "opportunistic" and "hostile" in the ASX statement that it issued ahead of an expected target's statement on Thursday.

Spotless chairman Garry Hounsell said talks with a global services business about a merger to rival the Downer deal had fallen over at the weekend due to a disagreement over price.

Mr Hounsell told Fairfax Media that an intensive due diligence process had been undertaken that had seen one-on-one meetings between the board and senior managers to test the value of the business.

"The board concluded that on those valuations the Downer bid was inadequate," he said.

"I'm not closing the door and I'm not forcing any of our shareholders not to accept the offer."

The company has decided not to use an independent expert to assess the bid and Mr Hounsell argued that the valuation process had served the same purpose.

"It is exactly the same process that an independent expert would have gone through. The board was in as good a position as anybody else to determine whether the Downer bid was adequate or inadequate and it landed on the latter," he said.

"I'm of the view that this company has a great future in the medium- to long-term."

Mr Hounsell also played up the expertise on the board as a reason for not using an independent expert.

New York hedge fund Coltrane Asset Management looms as a key stumbling block as Downer has made its bid conditional on 90 per cent acceptance from Spotless shareholders and Coltrane controls just over 10 per cent.

"They need flexibility to deal with their scrip as they see fit at the time," Mr Hounsell said.

"They have confidence in the company's reset program and are keen to back both the management and the board. They have contacted us this weekend they contacted us to say they were still of that view."

"They resolutely believe that this bid undervalue Spotless and they are willing to back the directors.

Downer, which holds 19.9 per cent of Spotless, declined to comment.

The announcement follows an unsuccessful attempt by Spotless to have the bid knocked off at the Takeovers Panel over complaints about "misleading" statements.

Mr Hounsell said the Downer offer represented a premium of 59 per cent to the share price the day prior to the bid but just a 10 per cent premium to the 12 month average.

Spotless said in its statement that New York hedge fund Coltrane Asset Management, which holds 10.37 per cent of Spotless, did not support the deal and that was another reason to reject the proposal.

The statement did note that Coltrane had not made a "final decision" and reserved its rights to take any action it felt was appropriate.

Both companies shares were steady on Monday closing unchanged.