UPDATE 1-Hollysys still backs Ascendent's buyout deal despite Dazheng's higher bid

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Jan 29 (Reuters) - Hollysys Automation Technologies said on Monday its special committee has retained a recommendation that shareholders vote for Ascendent Capital's acquisition deal as the offer from a Dazheng Group-led consortium was not superior.

A consortium led by Dazheng Group earlier on Monday said it has proposed to acquire all outstanding shares of the U.S. listed Hollysys at $29.50 each, up from its previous offer of $29, in negotiations with the special committee that started on Sunday.

The Chinese automation control system provider said last year it had agreed that Hong Kong-based private equity firm Ascendent Capital, which already owns a 13.7% stake in the company, will acquire the outstanding Hollysys shares at $26.5 each in a deal valued around $1.66 billion.

Hollysys said its special committee has concerns over equity financing by Dazheng and its ability to close a transaction, citing changes in equity consortium structure and Dazheng's proposed yuan-denominated escrow account. (Reporting by Rishabh Jaiswal in Bengaluru and Roxanne Liu in Beijing; Editing by Sherry Jacob-Phillips and Shri Navaratnam)