New Delhi: Tata Steel's revised bid to take over Corus Group Plc to forestall a competing offer by a Brazilian company has been approved by the board of the Anglo-Dutch steel-maker amid market concerns over high valuation.

"The boards of Tata Steel and Corus are pleased to announce they have agreed the terms of an increased recommended acquisition at a price of 500 pence in cash per Corus share," the two companies said in a statement.

The previous offer on Oct 19 valued Corus at 455 pence a share - a net valuation of 4.3 billion pounds ($8 billion).

"We remain convinced of the compelling strategic rationale of this partnership and revised terms deliver substantial additional value to Corus shareholders," Tata Sons chairman Ratan Tata said.

"The revised acquisition terms from Tata Steel are a substantial increase from the previous offer. Accordingly, the Corus Board are pleased to recommend this to Corus shareholders," Corus chairman Jim Leng added.

But the markets in India reacted immediately, leading Tata Steel shares dropping as much as three percent on the Bombay Stock Exchange (BSE) as investors feared the higher acquisition price may hurt the profitability of the acquired entity.

Merchant bankers dealing with the buy-out said while the financial commitment for 4.3 billion pounds was intact, the Tatas had approached Standard Chartered Bank and Standard Chartered First Bank of Korea for additional finances.

"ABN Amro and Deutsche Bank, as joint financial advisers to Tata Steel and Tata Steel UK, are satisfied sufficient resources are available to satisfy in full the consideration payable to Corus shareholders," the joint statement said.

The Tatas  the largest private conglomerate in India with 96 companies in its fold - had revised their offer after Brazil's Cia Siderurgica Nacional (CSN) was planning to make an offer for Corus shares at around 475 pence each.

The deal  which surpasses the net foreign direct investment inflows into India last fiscal of some $7 billion would more than quadruple their sales to $23 billion.

The Anglo-Dutch company is currently ranked the ninth largest steel producer in the world with 18.2 million tonnes, while Tata is ranked 56th with five million. The acquisition is seen as taking their rankings several notches up to sixth.

The top two slots in the global steel space are currently held by Indian-owned entities - Mittal Steel and Arcelor, both of which are in the stable of London-based Lakshmi Niwas Mittal.