Shares in Uttam Galva Steels opened at a life high of 125.05 rupees on the BSE after the world's top steel maker ArcelorMittal said on Monday its unit had made an offer for a 29.39 percent stake.

The shares hit the upper circuit on the BSE and were up 10 percent on the NSE at 125.35 rupees.

ArcelorMittal Netherlands B.V., a unit of ArcelorMittal has made an open offer for 35.22 million shares of Uttam Galva at 120 rupees each with a offer price of up to 4.22 billion rupees, financial manager to the open offer SBI Capital markets said in a newspaper advertisement.

The offer will open on Oct 31 and close on Nov 19. Upon successful conclusion of the offer, ArcelorMittal will hold 35 percent stake in the Indian cold-rolled and galvanized products maker.

On Sept 3, ArcelorMittal signed an agreement to buy 5.6 stake in the company from Uttam Galva's existing promoters - R K Miglani family - and on Sept 4 it signed an agreement to become co-promoter of the company, ArcelorMittal said in a press statement.

Arcelor is the largest supplier of automotive grade steel in the world and we hope to benefit from this in the long term... The idea really is to bring them in as strategic investors, Ankit Miglani, director, Uttam Galva, told news channel NDTV Profit.

ANALYSTS UPBEAT

Analysts said the deal will help Uttam Galva in terms of sourcing, technology, but added that ArcelorMittal's entry into the domestic steel market would add to pricing pressure.

With this deal they (Uttam Galva) can secure their raw materials supply...the company would benefit because of ArcelorMittal's technology and its global size, said Eric Martins, analyst at Systematix Shares and Stocks.

This may increase the pricing pressure in the domestic steel industry, he added.

The apparent shift in ArcelorMittal's strategy from manufacturing low cost steel in India to buying an on-the-ground presence in the downstream flat steel market...could be potentially negative for the flat steel upstream producers, J P Morgan said in a research note.

We believe Indian flat steel segment is likely to see overcapacity over the next 3 years and additional entry of a large competitor is interesting, in our view, note added.

(Reporting by Ketan Bondre and Sowmya Kamath; editing by Sunil Nair)