The UK security group said it has been in talks with Allied Universal and has received an offer of 245p per share.
GardaWorld, which went hostile with its bid after a failure to engage the FTSE 250 company in talks, last week upped its offer to 235p per share.
Shares in G4S shot up to 255.6p in early trade on Wednesday, suggesting investors expect GardaWorld, which is 51% owned by London-based private equity group BC Partners, to come back with another improved offer.
The UK group’s board said they had “carefully considered” GardaWorld’s revised offer but unanimously decided to reject it “on the basis that it continues to undervalue G4S”.
Garda said last week that it has also agreed with the G4S UK pension trustee on a £770mln “support package” of cash and other measures.
After Allied Universal made an initial approach where it proposed an offer of “at least 210p” per share in early November, G4S said it has been in talks with the Conshohocken, Pennsylvania-based group.
These discussions resulted in the recommended cash offer from Allied Universal today.
“We strongly urge shareholders to take absolutely no action in relation to GardaWorld’s revised offer,” G4S said in a stateent.