Arcelor has set a deadline of this weekend for deciding on competing offers from Mittal Steel and Severstal of Russia.
The board of the Luxembourg-based steelmaker said last night it would meet on Sunday to take a decision on the proposals from its two suitors and make a recommendation to shareholders.
The move came after the French stock market forced Arcelor to suspend its shares pending a statement clarifying the state of merger talks.
Earlier, Severstal's owner, Alexey Mordashov, announced that he was prepared to sweeten his merger terms with Arcelor following a hostile reception from its shareholders The latest proposal would involve Severstal taking a 25 per cent stake in the merged company rather than 32 per cent as planned and scrapping a planned cash contribution of €1.25bn (£860m).
Mr Mordashov claimed that under the new deal Arcelor shareholders would be €2bn better off. However, the claim was greeted with scepticism and, significantly, Severstal's latest approach was made unilaterally, without the endorsement of the Arcelor board unlike the original merger announcement. "Where are these €2bn? I want it to be explained to me," said Colette Neuville, president of the minority shareholder group, Adam.
Mr Mordashov also offered to scrap the proposed "strategic committee" over which he would have had control. But at the same time, there will no longer be anything to stop him from buying shares in Arcelor beyond his 25 per cent stake.
The weekend deadline sets the scene for Mittal Steel, which is controlled by the Indian steel billionaire Lakshmi Mittal, to raise its €23bn offer in return for a recommendation from the Arcelor board.
However, some analysts said the momentum in the five-month takeover battle now appeared to be with Mr Mittal and that it might not be necessary to increase the bid to succeed.