China's Baosteel details Wuhan deal to forge ArcelorMittal rival

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Earlier, the government gave the long-awaited deal its approval and in a detailed statement, Baosteel said it will buy Wuhan Steel at 2.56 yuan ($0.3839) per share by issuing new shares at 4.6 yuan per share, valuing Wuhan at 3 billion yuan.

The new entity will be named China Baowu Steel Group, Baosteel Group's listed units Bayi Iron & Steel and Baosteel Packaging said in a filing.

Based on 2015 capacity, the two companies will produce about 60 million tonnes a year, leapfrogging Hebei Iron and Steel into the top spot among China's steelmakers.

Baoshan Iron & Steel, Baosteel Group's main listed unit, will issue new shares to shareholders of Wuhan Iron & Steel to absorb the company, a plan that is subject to government approval.

The government wants 60 percent of national output to come from the top 10 steel makers by 2025, up from less than 40 percent now as well as to build 3 to 5 giant steel mills.

The move is also part of Beijing's efforts to streamline its inefficient state-owned enterprises in industries from shipbuilding to materials and railways.

The creation of Baowu Steel will cut to 103 the number of companies run directly by the central government, down from 111 at the start of the year, and the figure could eventually reach 40, state media have reported.

Amid concerns about plunging profits, soaring debt and chronic inefficiency, China's reform program aims to eliminate duplication, waste and "cut-throat competition" between firms with nearly identical business structures.

China's delayed merger of Angang and Benxi Steel would be next on the list of priorities, following the restructuring of Baoshan Iron and Steel and Wuhan Iron and Steel.

(Reporting by Ruby Lian and David Stanway; Editing by Clarence Fernandez and Alexander Smith)