Billionaire steel magnate Lakshmi Mittal has launched an audacious £12.75 billion takeover attempt on rival Arcelor of France - in a move that would see him strengthen his position at the top of the world's steel industry.

Mittal Steel, Mr Mittal's Dutch listed steel giant, said today it had offered €28.21 a share for Arcelor in an €18.6 billion bid that, if successful, would bring together the world's number one and number two steelmakers and create the first producer capable of generating more than 100 tonnes of steel a day.

As he pitched his offer at a 27 per cent premium to last night's closing price of Arcelor - traded on the Paris arm of Euronext - Mr Mittal said an enlarged company would have unprecedented scale, scope and synergies and would have a pro forma market value of some $40 billion.

"The last 10 years have seen a major shift towards consolidation of the steel industry, helping to create sustainable value for all stakeholders. Both Mittal Steel and Arcelor have been at the forefront of this consolidation and share a similar vision for the future of our industry," Mr Mittal said.

"We believe the offer provides a very attractive premium and has been structured so that Arcelor shareholders have the opportunity to participate in the exciting growth potential of the combined company, while also receiving a generous cash element."

Mittal Steel also said it had agreed to sell Dofasco, Arcelor’s recent acquisition in Canada, to German steelmaker ThyssenKrupp AG for C$68 a share.

Earlier this week, ThyssenKrupp abandoned its efforts to buy Dofasco after a battle with Arcelor for the asset.

Arcelor made no immediate comment on the proposal from Mittal Steel.

Mittal Steel said that pro forma revenues for the enlarged group last year would have been about $69 billion, with pre-tax profits before exceptionals coming in at $12.6 billion.

Mr Mittal urged Arcelor's shareholders to "play a part in the future of the world's only global steel company".

Under the term's of Mittal's proposal, Arcelor shareholders would receive four Mittal Steel shares and €35.25 in cash for every five Arcelor shares. They would also have the right to receive a cash or stock mix in any proportion they choose, provided that 25 per cent of the aggregate consideration paid is in cash and 75 per cent in stock.

With this arrangement in place, Mittal said its maximum cash payout would be €4.7 billion, and would issue no more than about 527 million shares.

The offer is conditional on Mittal receiving more than 50 per cent of Arcelor's share capital and voting rights.

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