The listed steelmaker will offer 3.03 billion new yuan-denominated shares to Baotou Iron & Steel Group at 2.3 yuan each, the Inner Mongolia-based company said in a statement Thursday. Baotou Iron & Steel, the parent, is in talks with the world's top steelmaker over the possible sale of a 49 percent stake.

The acquisition will mean that almost the entire group is publicly traded, making it easier for Baotou Steel Union to take over or merge with rivals.

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China, the world's biggest steelmaker, is encouraging consolidation in the industry to curb overcapacity and boost competitiveness as its economy expands.

"The Chinese government is pushing its state-owned companies to be fully listed," said Wang Shuai, steel analyst with KGI Consulting.

The policy helps companies to "boost operational efficiency, enhance transparency, and pave the way for them to finance expansion from the public."

The proposed price of the new stock is on a par with Baotou Steel Union's closing share price of 2.31 yuan on the Shanghai Stock Exchange on October 27, its last day of trade before Thursday's announcement.

The stock resumed trading and closed at 2.54 yuan.

China's top steelmakers including Baoshan Iron & Steel, Angang Steel and Wuhan Iron & Steel have completed the move to have all their steel assets publicly traded.

Baoshan Steel raised 10.2 billion yuan by offering stock to its parent and investors in April last year to fund the purchase, while Angang paid 19.7 billion yuan in stock to buy its plants in January.

Baotou Steel Union is buying 18 units from its parent including an iron- making factory, rolling plants, coking facilities and a specialty steel factory, said the statement issued to the stock exchange. Baotou Iron & Steel Group produced seven million tons of crude steel last year, more than double the listed unit's output.

Mittal Steel, the world's largest steelmaker, opened talks to buy as much as 49 percent of Baotou Iron & Steel last December. Since then, Mittal agreed to take over Arcelor, its nearest rival, to form Arcelor Mittal.

Still, the talks on the Baotou Iron & Steel stake purchase have not made any progress as Arcelor Mittal is also awaiting Chinese government approval to buy a minority stake in China's Laiwu Steel Corp, Sridhar Krishnamoorthy, Mittal's China manager, said in September. Arcelor agreed to buy the Laiwu stake in February, before its takeover by Mittal.

Baotou Steel Union's asset transfer is subject to approval from the China Securities Regulatory Commission, the statement said. The parent would have a 72 percent interest in the listed unit after the deal is completed, Baotou Steel Union said.

China's economy, which expanded an average 9.5 percent in the past five years, fueled a 25 percent jump in steel output last year as more cars and appliances were built. The nation's crude steel output may rise 19 percent to as much as 420 million tons this year, Lu Jianhua, head of foreign trade at the Ministry of Commerce, said last week. BLOOMBERG