By Julien Ponthus

BRUSSELS, May 26 (Reuters) Arcelor, fighting a takeover bid by Mittal Steel, unveiled plans on Friday to buy Severstal in a deal giving the Russian group's main owner a one third stake in what would be the world's biggest steel producer.

The deal values Arcelor at 44 euros per share, excluding a proposed 1.85 euros dividend, a premium to the 35.62 euros value of the cash and share offer currently tabled by Mittal.

Severstal's controlling shareholder, Alexey Mordashov, said the deal valued the Russian company at around 13 billion euros.

''(This represents) a premium of 100 percent over Arcelor's closing price on January 26, 2006, the day before Mittal Steel announced its hostile offer, and 36.6 percent over Arcelor's closing price ex-dividend on May 25, 2006,'' Arcelor said.

''It's unlikely Mittal will chase it at that price,'' one share dealer said on Friday.

Mittal Steel's existing bid values Arcelor at 22.8 billion euros (.1 billion).

''I think this is a deal-breaker for Mittal. It will be very difficult to match this,'' a Paris-based analyst said.

''The deal makes industrial sense. With the deal Arcelor will make some 40 percent of its EBITDA (earnings before interest, tax, depreciation and amortisation) in Russia and Brazil, where there are high margins.'' Mittal was not immediately available for comment.

Arcelor, now the second largest steelmaker behind Mittal in terms of steel volumes, said it would consult shareholders about the proposed deal, which it said would create the world's most profitable steel group, targeting an annual core profit of 10 billion euros.

Arcelor's existing shareholders would have about 68 percent of the combined group, it said.

Arcelor said last Sunday it was ready to evaluate Mittal's business plan, but investors and analysts said they suspected it was more interested in buying time to find an alternative, such as the one unveiled on Friday.

Arcelor and Mittal have have been engaged in a war of words since Mittal unveiled its plan to buy its rival in January.

Arcelor had dismissed Mittal's initial bid as inadequate and also offered them a 5-billion-euro share buyback.

Mittal then surprised the market by raising its cash-and-shares offer for Arcelor a week ago, only a day after the offer went live.

Under the agreement with Severstal Mordashov will contribute all of his economic interests in Severstal and Italian steelmaker Lucchini in return for Arcelor shares.

Mordashov owns 89.6 percent of Severstal according to information given in a joint presentation by Arcelor and Severstal.

He will also pay 1.25 billion euros in cash in exchange for more Arcelor shares at a price of 44 euros, giving him approximately 32 percent of the enlarged Arcelor.

The enlarged Arcelor would be the world's biggest steel company, with 46 billion euros in sales, 9 billion euros in earnings before interest, tax, depreciation and amortisation (EBITDA), 70 million tonnes of production, based on 2005 numbers.

Arcelor said the combination would add value as early as 2006 and create synergies of 590 million euros.

REUTERS PV HT1322