Secure Computing has rejected an unsolicited buy-out bid from rival CyberGuard, saying it did not believe it was in the best interest of shareholders.

The company turned down the one-for-one stock offer on Thursday, after consultations with its financial advisors and board of directors.

CyberGuard made the bid on Sunday, saying it believed that by combining the two companies, they could slash costs and capture more market share. At the time of the bid, CyberGuard's stock stood at $7.80 a share, making the offer worth about $277.5 million.

CyberGuard has responded saying it was "disappointed in the initial response" by the board, but added that "we believe we have a high probability of raising cash that would make this transaction more compelling to the Secure Computing shareholders." It reiterated its belief that the proposed merger would lead to $14 million in cost savings, generating an increase in earnings of $0.20 a share.

CyberGuard has been aggressive in filling out its portfolio through acquisitions over the last year and a half, scooping up VPN acceleration provider NetOctave, as well SnapGear, which offers embedded Linux security and edge firewalls, and content security company Webwasher.

Secure Computing representatives were not immediately available to comment on whether they would consider an increased offer from CyberGuard.