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Last Updated: Wednesday, 19 October 2005, 17:33 GMT 18:33 UK
New bid for power station snubbed
Drax Power Station
Drax supplies about 7% of Britain's electricity needs
Drax Group, owner of Europe's biggest coal-fired power station, has rejected a new takeover offer.

The 2bn ($3.5bn) approach made by International Power and Japanese trading house Mitsui "significantly undervalued" the group, it said.

Last week, Drax announced it was considering a 2.07bn offer from a consortium led by Apollo Management, Texas Pacific and TowerBrook Capital.

In September it rejected a 1.9bn bid from US group Constellation Energy.

The North Yorkshire-based power station supplies about 7% of Britain's electricity needs.

The complex near Selby, which employs 560 staff, is owned by creditors after going into administration in 2003.

Drax ran into difficulties in 2002 after its biggest customer - electricity supplier TXU Europe - failed to pay a 50m bill. TXU was later put into financial administration.

International Power, which was promoted to the FTSE 100 index earlier this year, acquired 13 power plants from US energy group Edison last year for $2.2bn. In a separate deal it also bought a Portuguese plant from German utility RWE for 205m euros.

Mitsui & Co has previously teamed up for joint ventures with International Power.

Shares in International Power were down 4.2% at 218 pence on Wednesday afternoon.

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