Mittal Steel, the world's largest steel group, raised the value of its hostile bid for rival steelmaker Arcelor by a third today.
Mittal Steel said its significantly improved offer implied a "total equity value for Arcelor of €25.8 billion".
There was no immediate reaction from Arcelor, the world's biggest steel company by sales revenue, but it called a board meeting to discuss the new offer.
Mittal Steel said it was now offering one Mittal Steel share and €11.10 in cash for each Arcelor share; or 17 Mittal Steel shares for every 12 Arcelor shares; or €37.74 in cash for each Arcelor share.
Previously, the main offer from Mittal Steel was 0.8 Mittal Steel share and 7.05 euros per Arcelor share.
The new terms mean the Mittal family's shareholding in the enlarged company would fall to 45 percent. Its initial offer would have left the family with just over 50 percent.
"Not only are we offering a very significant increase in the cash component, but also a greater participation in the combined company," Chairman and chief executive Lakshmi Mittal said.
"The revision reflects our long-term confidence in the health and prospects of the steel industry, in which the Arcelor/Mittal combination would be the undisputed sector leader," he said.
Aurel Leven fund manager Renaud Berenguier said: "It is a nice effort, but it is not sure this will carry the day. They raise cash, they boost corporate governance and they are acting quickly to try and neutralise the Arcelor buy-back".
Shares in other steel groups were buoyed by the prospect of a higher bid, with Corus up 4.7 percent and Thyssenkrupp up 1.7 percent.
On Thursday, Mittal Steel formally launched a cash and shares bid for Arcelor on terms outlined in January.
If successful, Rotterdam-based Mittal Steel would become a global giant worth around $40 billion, employing 320,000 people and producing about 10 percent of the world's steel.
Mittal Steel announced its offer for Arcelor on January 27 but had to wait until this week for regulatory clearance for the bid from watchdogs in Belgium, France and Luxembourg before posting its offer document.
The offer is open until June 29. Regulators have said the result would be announced on July 13.
Arcelor has urged shareholders to preserve the company's independence and has already promised an increased 2005 dividend and a 5 billion euro share buyback at a price above the market level, in a bid to win their support.
Arcelor has also ring-fenced its Canadian unit Dofasco, which it bought earlier this year, inside a Dutch foundation.
The move would prevent any predator from selling it for five years. Mittal had planned to sell the unit to Thyssenkrupp, which lost a stock market battle for the unit last year to Arcelor.