Australian energy group Origin Energy has told shareholders to reject a £6.7 billion bid from the UK's BG Group.
The board of Origin Energy now intends to recommend that shareholders reject BGs bid of AU$15.50 cash per share.
Origin chairman Kevin McCann said the offer did not take into account a continued strong interest in the coal seam gas (CSG) and the sudden hikes in oil prices.
The firm has recently received a report highlighting a significant increase in reserves and contingent resources.
Furthermore, Mr McCann stated a recent acquisition of a gas-fired power station for AU$700 million "creates significant value for shareholders".
However, BG has claimed Origin is over-egging their CSG position.
BG Group chief executive Frank Chapman said: "It remains the case that Origin must spend a significant amount of time and money to prove up its CSG potential. Origin continues to lag its competitors in the exploration and appraisal of its CSG acreage."
He added: "Our offer is not focused solely on Origin's coal seam gas resources. We wish to retain and invest in all of Origin's businesses in Australia - from gas resources and power generation through to retail gas and electricity marketing."
At 10:30, the BG Group share price fell 0.90 per cent to 1207p.