The bidder, co-owned by Czech investor Daniel Kretinsky and Slovak partner Patrik Tkac, have argued the move offered "compelling value and a unique opportunity" for shareholders given a difficult market and challenges facing Metro.

However, Metro said both its management and supervisory boards recommended that shareholders should not accept the offer.

A source familiar with the situation said the vote in the supervisory board was unanimous with one abstention from German family-owned investment group Haniel, which has backed EGPC's plan.

"We consider the price offered by EPGC to be inadequate as it substantially undervalues Metro and, even after reviewing its further conditions, recommend our shareholders not to accept the Offer," Metro CEO Olaf Koch said in a statement https://www.metroag.de/en/media-centre/news/2019/07/24/management-board-and-supervisory-board-recommend-not-to-accept-epgc-offer.

Shares in the group, which owns a core cash-and-carry business and a hypermarkets chain which is up for sale, were down 0.7% at 15.41 euros at 0835 GMT.

EPGC said in June its offer price of 16 euros for each ordinary share and 13.80 euros for each preferred share represented a 34.5% premium to when EPGC first invested in Metro last August.

Metro argued on Wednesday that progress with its transformation was being ignored, including the planned Real hypermarkets sale and the search for potential partners for its China business.

Metro also warned of a high leverage burden.

"EPGC's Offer is highly leveraged with significant repayment and interest requirements, most likely burdening the company in the event of a successful takeover with a significantly increased debt level."

Once a sprawling retail conglomerate, Metro has in recent years been restructuring to focus on its core cash-and-carry business, selling off the Kaufhof department stores and then splitting from consumer electronics group Ceconomy.

Kretinsky's other investments include Czech soccer club Sparta Prague and the group behind French newspaper Le Monde.

(Reporting by Thomas Seythal in Berlin and Matthias Inverardi in Duesseldorf; Editing by Tassilo Hummel/Keith Weir)