Essar Energy had rejected a bid from its largest shareholder on the grounds it undervalues the firm's prospects.
The bid from the powerful Indian Ruia family's Essar Global Fund Limited (EGFL) for the outstanding 22% of the energy company it does not own came in at 70p share.
In a statement through the London Stock Exchange, the firm said an independent committee had considered the proposal and concluded that despite the current operational and Indian macro-economic challenges facing the business, the offer does not reflect its potential.
Philip Aiken, chairman of the independent committee, said: 'The independent committee is unanimous in concluding that the current proposal from EGFL clearly undervalues the company and its long-term growth prospects. The independent committee is fully committed to safeguarding the interests of minority shareholders.'
Shares in Essar listed at 420p per share four years ago and shot up to a high of 638p in December 2010, earning it a place in the FTSE 100.
However, they have since slumped as the problems mounted and at 9.27am they had moved up 2.2% to stand at 66p.
The bid rejection will please Essar's largest external shareholder Standard Life Investments, which had said the offer smacked of 'cynical opportunism'.
Head of equities David Cumming (pictured) said in a statement at the time: ‘Essar Global's potential attempt to buy out the minority shareholder position in Essar Energy, capitalising on a technically depressed share price, is a calculated attempt to deprive minority shareholders of the substantial future upside in Essar Energy's valuation.’