New Delhi, April 16 (IANS) Continuing the overseas acquisition spree by India Inc, conglomerate Essar Global's steel arm Essar Steel Holdings Ltd is all set to take over Canadian steel major Algoma Steel for $1.58 billion and strengthen its position globally.

"We believe Algoma is an excellent addition to our existing steel business and also offers growth potential. This acquisition fits in with our global steel vision of having world-class low-cost assets, with a global footprint," Essar Global chairman Shashi Ruia said in a statement Monday.

"Algoma provides us with an excellent platform for the Canadian and North American markets," Ruia added.

According to an agreement signed between the two companies in Canada Sunday night, Essar would be able to obtain the shares of Algoma Steel for 56.00 Canadian dollars in cash per share after the latter undertakes a necessary court approval.

While the acquisition will be completed after the meeting of shareholders of the Canadian firm, which will take place in June, according to the board of directors of Algoma Steel the shareholders would vote in favour of the deal.

"The board of directors unanimously supports the Essar proposal as it reflects a significant premium to the historical share price of Algoma," said Benjamin Duster, chairman of Algoma's board of directors.

Algoma Steel, which emerged from bankruptcy protection in 2004, achieved a turnover of $1.9 billion in 2006. The company's products are sold in Canada and the US as well as overseas.

Essar Global, which operates in areas such as steel, oil and gas, power, communications, shipping and logistics and construction, is expecting revenues to the tune of $10 billion by the end of 2007-08.

The deal is yet another instance of the increasing trend of Indian firms acquiring controlling stakes and assets abroad.

Indian companies have already made mergers and acquisitions worth over $30 billion already in the first two months only of 2007, says the Confederation of Indian Industry (CII).

"Forex reserves in India are definitely going to increase significantly with more and more Indian companies looking out and clinching such massive deals," Sarita Nagpal, head of manufacturing services division, CII, told IANS.

Recently, the Tata group, one of India's largest conglomerates, bought Anglo-Dutch steel company Corus for $12 billion. This was followed by the Birla group's acquisition of Canadian aluminium company Novelis Inc for $6 billion.

According to a recent report by the Associated Chambers of Commerce and Industry (ASSOCHAM), "The number of outbound M&A deals has increased sharply over the past six years from about 37 in 2001 to more than 170 in 2006. The transactions gathered tremendous momentum in 2005."

The report also noted that the total number of deals more than doubled in 2005 from 2004 to reach a figure of close to 150 from 70 in previous year.