Steelmakers have seen prices fall after a two-year boom

The Luxembourg-based firm said it had approached Dofasco investors with the 40-euros-a-share bid after the two had been unable to agree on a deal.

Arcelor said the move represented a "logical expansion" of its business into the key North American market.

Steel prices have fallen 30% in the past six months after a two-year boom.

This has made life tougher for steel producers, making industry consolidation more likely.

Compelling offer

For Dofasco, the question is not if it should join forces with another industry player but when and with whom Guy Dolle, Arcelor's chief executive Check Arcelor's share price

Arcelor said it had first approached Dofasco - Canada's largest steelmaker - at the start of the year about a possible deal, but was unable to reach agreement.

As a result, it had decided to approach Dofasco shareholders directly with what it described as a "compelling offer".

"For Dofasco, the question is not if it should join forces with another industry player but when and with whom," said Guy Dolle, Arcelor's chief executive officer.

"We strongly believe that Arcelor is the best partner for Dofasco and that this is the right time."

Cooling prices

Dofasco is a leading supplier to the car, construction, energy, manufacturing and packaging industries - with operations in Canada, the United States and Mexico.

Arcelor is a leading player in Europe and Latin America and has been looking to expand in the US and developing markets such as Africa.

Steelmakers have ridden the crest of a wave over the past two years as China's economic expansion has fuelled a sharp rise in prices.

However, the market has cooled this year as Chinese consumer demand has slowed and many European economies have remained weak.