Brazilian steelmaker CSN has agreed to buy Anglo-Dutch rival Corus for £4.9 billion after trumping an offer from India's Tata Steel announced only hours before.
Companhia Siderurgica Nacional, as the Brazilian company is formally known, said it would pay 515 pence for each Corus share, topping Tata Steel's offer of 500p.
Corus stock leapt 6 per cent to a six-year high of 529-1/2 pence on hopes the bid battle would yield an even higher offer. CSN shares tumbled 1.42 per cent in early trading in Sao Paulo to 63.83 reais on concerns it would get caught up in a costly bidding war.
Tata Steel, which kick-started the battle with an offer of 455 pence a share, said it was considering its position.
A takeover of Corus by either CSN or Tata Steel would create the world's fifth-biggest steelmaker, producing around 24 million tonnes of steel a year.
It would be the latest deal in the industry as companies look for global reach, economies of scale, and to secure valuable raw material supplies. Earlier this year Dutch-based Mittal Steel bought Luxembourg's Arcelor to create Arcelor Mittal, the world's biggest steelmaker.
A Corus spokesman said the CSN deal would give Corus an enterprise value of about 7.7 times its forecast 2006 earnings before interest, tax, depreciation and amortisation (EBITDA), compared with a steel sector average of about five times.