Israel-based security vendor Aladdin Knowledge Systems has rejected a $180m (£98m) takeover offer from Vector Capital.

Vector Capital is a shareholder and, through its wholly-owned subsidiary SafeNet, a direct competitor of Aladdin.

After a review with its financial and legal advisors, Aladdin‘s board of directors decided the offer of $13 per share in cash significantly undervalued the company.

The board also evaluated Vector Capital's alternative offer to acquire Aladdin's digital rights management (DRM) business for $125m to $135m and concluded that the proposal was not in the best interest of the shareholders.

Yanki Margalit, chief executive of Aladdin, said: “The Aladdin Board carefully considered Vector Capital's unsolicited proposals and unanimously determined that such proposals are not in the best interests of Aladdin's shareholders.

“We believe that these unsolicited proposals are opportunistic, significantly undervalue Aladdin, and do not fully recognise the value of our company or its DRM business. The Board is committed to acting in the best interests of its shareholders in evaluating opportunities to enhance shareholder value.”

Margalit added: “As part of our review, the Board and its advisors evaluated the Vector Capital proposals in the context of the company's recent financial performance, our current business plan as well as additional alternatives available to the company which would enable it to enhance shareholder value.

“We are confident that, through execution of its strategy, Aladdin will create substantially greater value for shareholders than either of Vector Capital's proposals. Vector Capital fails to recognize the intrinsic value of the Company's business and strategic initiatives.”

The board has also confirmed that it has received a request from Vector Capital to summon an extraordinary general meeting of Aladdin shareholders to consider certain changes to the composition of the Aladdin board of directors. The board is reviewing the request.