Shares in UK Coal have risen on the back of new reports of a potential takeover by the Vienna-based investment fund management group Meinl.

Coming soon after the coal producer secured long-term supply contracts with E.ON and EDF Energy, the Sunday Times has reported that Meinl International Power has approached it in regards to a possible acquisition of its UK operations.

Alongside its seven surface mines which produce almost half of all the country's coal, UK Coal also operates a number of power generation sites which use waste gas from the mines to produce electricity.

However, while a bid of between £300 and £400 million is expected to be made, industry observers also expect the company to reject such an approach, particularly given the improved long-term prospects for the coal industry within the UK energy sector.

Less than two years ago, the Doncaster-based UK Coal turned down a proposed takeover by a consortium which included the private equity firm Alchemy.