The company said on Friday that it would acquire Severstal in a deal under which the main owner of Severstal takes a one-third stake in the enlarged Arcelor group.
The deal values Arcelor at 44 euros ($56.2) a share, excluding a proposed 1.85 euro dividend. Mittal's current offer is worth 35.62 euros a share.
"[This represents] a premium of 100% over Arcelor's closing price on January 26, 2006, the day before Mittal Steel announced its hostile offer, and 36.6% over Arcelor's closing price ex-dividend on May 25, 2006," Arcelor said.
Mittal Steel's existing bid values Arcelor at 22.8 billion euros ($29.1 billion).
Mittal was not immediately available for comment.
Arcelor said its existing shareholders would have about 68% of the combined group.
Arcelor said it would consult shareholders about the proposed deal, which it said would create the world's most profitable steel group.
Under the agreement with Severstal, the Russian company's controlling shareholder, Alexey Mordashov, would contribute all of his economic interests in Severstal and Italian steelmaker Lucchini in return for Arcelor shares.
He will also pay 1.25 billion euros in cash in exchange for more Arcelor shares at a price of 44 euros, giving him about 32% of the enlarged Arcelor.
Arcelor to merge with Severstal - Arcelor press release