UK-based eClinical company ClinPhone rejected a preliminary takeover offer from Parexel International,  a contract research organization (CRO) based in Waltham, Mass.

Although financial details were not disclosed, ClinPhone said it considered the offer too low.

“The board believes the indicated value materially undervalues the company and its prospects and the board therefore rejected this approach,” ClinPhone said in a statement.

Shares of the eClinical company’s stock, listed on the London Stock Exchange, shot up 16% to $1.93 immediately on the news. Parexel’s shares closed up 3.7% on Feb. 19 at $57.88.

In a statement, Parexel confirmed that it had made the initial offer for all of the shares issued by ClinPhone to be paid in cash. With its initial offer rejected, the company must now decide its next move. 

“Parexel is currently evaluating its options in relation to ClinPhone. A further announcement will be made in due course. However, there can be no certainty that an offer for ClinPhone will be forthcoming,” Parexel's statement said.

ClinPhone has about 730 employees. The company is valued at about $127 million. Parexel had 2007 revenues of more than $900 million.

In an interview with Reuter’s John Bowker, ClinPhone chief executive Steve Kent stated: "We are extremely confident about it (rejecting the bid),” adding that the firm had not consulted shareholders about the approach. We have very substantial plans (for growth). We have a clear business plan," he said. According to Kent, ClinPhone’s directors have not yet consulted with shareholders regarding the offer.

In September 2007, UK-based clinical trials technology company ClinPhone was forced to reduce its estimated 2007 revenue by roughly $20 million and its earnings by $1.98 million. The company blamed the drop in estimated financials to an increase in sales of its electronic data capture (EDC ) software at the expense of licensing the product, telephone outages and a weak U.S. dollar.

ClinPhone said it had an “exceptionally high rate” of contract cancellations during June and July, primarily due to “operational” issues.