GREEN fuels company D1 Oils has dropped its takeover bid for fellow Teesside biodiesel company Biofuels Corporation, saying it was unable to value all its assets.

D1 made the initial approach to Biofuels last month after it suspended trading of its shares on the stock exchange and went into crisis talks with its bank. Biofuels, which is building the world's largest biodiesel plant at Seal Sands, Teesside, had lost a contract with its main customer, Petroplus Teesside, and delays to the commissioning of the plant meant costs were rocketing.

Barclays agreed to a rescue package with Biofuels and it resumed trading.

D1 announced on December 6 that it had made a preliminary approach to Biofuels at the time its shares were suspended, regarding a potential merger.

Yesterday, D1 said in a statement to the stock exchange: "The Board of D1, having reviewed the information provided by Biofuels, was unable to value clearly the underlying assets of the business and accordingly has decided not to proceed with the discussions.

"D1 approached Biofuels on November 17, immediately following the suspension of Biofuels' shares and prior to the agreement of the debt restructuring package announced by Biofuels on December 2.

"D1's purpose was to explore the opportunity for enhancing shareholder value as part of its strategy of producing biodiesel from renewable energy crops."

The company said it reserved the right to make or participate in any offer within the next three months with the agreement of Biofuels.

D1 Oils is planting jatropha shrubs across the world. Once the plant is ready for harvesting, the seeds are crushed to make oil, which is then refined to create biodiesel.

Biofuels' biodiesel plant in Seal Sands will refine diesel from rape seed or vegetable oil, once it is up and running. It is due to start production early next year.