LONDON (Dow Jones) - ThyssenKrupp AG, Germany's largest steelmaker, Monday agreed to buy Canadian peer Dofasco, Inc. for C$4.8 billion, trumping a hostile bid from European rival Arcelor .

ThyssenKrupp offered C$61.50 per Dofasco share, a 9.8% premium to Arcelor's offer of C$56 a share made on Nov. 23 .

The ThyssenKrupp new offer represents a 4% premium to Dofasco's closing price on Nov. 25 .

"It's an acceptable premium for now. It's not too high. But the question is: Will it be the last offer? It's possible that Arcelor could make another bid. And then you have to wonder where the bidding will stop," said Dirk Schlamp of DZ Bank.

ThyssenKrupp shares fell 2.2% in Frankfurt, Arcelor shares declined 1.6% in Paris , while Dofasco shares rose 7.5% to C$63.60 in Toronto trading.

The deal, which has been unanimously recommended by the Dofasco board, is expected to close before the end of the first quarter of 2006, ThyssenKrupp said in a statement.

The companies don't anticipate restructuring involving employees or operations as a result of the deal, which will give ThyssenKrupp a significant presence in the North American steel market.

"I'm not excited at all about the offer," said Jutta Rosenbaum of Commerzbank.

"There are certainly no synergies for ThyssenKrupp on the cost side. I think the price is too high and it was too high already for Arcelor, but at least it made a little bit more sense for them."

ThyssenKrupp said the merger, for which it will pay with available cash, will add to earnings in the first year.

Dofasco, based near Hamilton, Ontario, makes rolled, galvanized and tin-plated steel for use in the automotive industry.

(END) Dow Jones Newswires

11-28-05 1317ET Copyright (c) 2005 Dow Jones & Company, Inc. Copyright (C) 2005 Dow Jones & Company, Inc. All Rights Reserved.