Brazilian steelmaker CSN says it has agreed to buy Anglo-Dutch Corus for £4.9bn ($9.6bn), beating an offer from India's Tata Steel made hours earlier.
Companhia Siderurgica Nacional has agreed to pay 515 pence a share per Corus share, trumping Tata Steel's offer of 500 pence a share.
A Corus spokesman said the board was recommending that shareholders now accept the CSN offer.
Tata said it was now considering its position after the latest developments.
The escalating bid battle sent Corus shares up 5.5% to 527.75 pence in morning trade.
'Winning combination'
A merger of Corus and CSN would create the world's fifth-biggest steel firm, with output of 24 million tonnes annually.
CSN chairman and chief executive Benjamin Steinbruch said: "The strategic impetus for this combination is growth - growth in Brazil, in Europe and for our combined workforces.
"Our goal is to unlock the value of our iron ore assets through Corus, transforming them into cost-effective, high-quality steel products using Corus' advanced engineering capabilities and its excellent European distribution platform.
"This is a winning combination for all stakeholders."
He said a tie-up would enable Corus to secure supply of high quality, low-cost iron ore from CSN's Casa de Pedra mine, one of the largest in the world.
He said a deal would also provide Corus with access to increasing quantities of low-cost semi-finished steel.
'Strong platform'
Corus chairman Jim Leng, who had backed the latest Tata offer on Sunday night, approved the CSN bid on Monday.
"This offer is both higher than the initial proposal by CSN as well as the revised Tata offer of 500p a share," he said.
CSN
"It is also consistent with our strategic objective of securing access to raw materials, low-cost production and growth markets.
"The combination of the two businesses will create a strong platform from which to compete and grow in an increasingly global market."
If successful in its latest approach, CSN will pay £138m immediately into the Corus Engineering Steels pension scheme and increase the contribution rate to the company's larger British Steel pension scheme from 10% to 12% until March 2009, it said.
Tata Steel had earlier said it would fill the $240m (£123m) deficit in the Corus pension scheme immediately and would increase contributions to the British Steel scheme, which is in surplus.
Increased offers
Late on Sunday night Corus had earlier accepted a revised £4.7bn ($9.2bn) takeover offer from Tata Steel. The offer had valued Corus at 500 pence a share.
"Clearly, CSN is able to realise more synergies than Tata," said Rabobank analyst Richard Brakenhoff.
GLOBAL STEEL PRODUCTION 2005
Corus employs 47,300 people worldwide, including 24,000 in the UK at plants at Port Talbot, Scunthorpe and Rotherham.
It was formed out of the 1999 merger of British Steel and Dutch group Hoogovens.
Earlier in the autumn Tata had made an informal £4.1bn approach for Corus, but this was then trumped by CSN going to the Anglo-Dutch firm with a £4.3bn takeover proposal.
Tata chairman Ratan Tata had said any takeover would have been a "defining moment" for the firm.
The battle for Corus comes amid growing consolidation in the global steel industry.
With prices and demand soaring, Mittal Steel - the world's largest steel firm - bought European rival Arcelor for $34bn earlier this year.
^ Back to top | BBC Sport Home | BBC Homepage | Contact us | Help | ©
~RS~q~RS~~RS~z~RS~16~RS~)