Shares in AK Steel, of the United States, soared as much as 17 per cent yesterday on reports that Arcelor Mittal, the steel company controlled by Lakshmi Mittal, Britain’s richest man, is eyeing a $4.5 billion (£2.25 billion) takeover bid.

AK Steel, which is based in Ohio, rose more than $5 at one point to $37.70 in New York trading, close to the rumoured $40 price, while Arcelor Mittal’s Paris-listed shares lost about 2 per cent to € 41.50, even though the company said that it would not comment on market speculation.

However, analysts downplayed the chances of a deal going ahead since Arcelor already dominates the North American market with a 33 per cent share in flat steel and is unlikely to be given approval to take on the 5 per cent that AK Steel controls.

Its dominance, particularly of the market for steel supplied to car manufacturers, means that Arcelor Mittal is having to sell its $1 billion Sparrows Point steel plant in Maryland to allay competition fears. The company was created by Mittal Steel’s $30 billion takeover of Arcelor last year, which consolidated Mittal’s position as the world’s biggest steel producer.

AK Steel shares had risen 31 per cent in the past three weeks even before yesterday’s gossip on talk that it would be a tasty takeover morsel for an overseas bidder keen to gain a foothold in America. Yet James Wainscott, its chief executive, sold 146,666 shares two weeks ago, indicating that he was not aware of an imminent bid then. Mr Wainscott has also emphasised that he wants the company to remain independent.

Mr Mittal’s appetite for deals appears not to have slackened. In December he snapped up Sicartsa, of Mexico, for $1.4 billion and last month confirmed a $1 billion approach for Sesa Goa, the Indian iron ore exporter. He has set aside up to $5 billion for investment this year and is aiming to expand the company’s production beyond last year’s 110 million tonnes

Mr Mittal has predicted a wave of mergers, driven by the emerging economies of Brazil, Russia, China and India.

Corus, the Anglo-Dutch group, was taken over by Tata Steel, of India, for £6.7 billion recently and Russian companies such as SeverStal are openly on the hunt for acquisitions.

AK has enjoyed a profits surge of late, reporting first-quarter earnings of $62.7 million to the end of March, compared with $6.2 million a year ago.

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax