The Ruia-owned Essar Group has agreed to acquire Algoma Steel of Canada for nearly $1.58 billion in cash in a deal that is expected to close in June this year.

The decision to buy the Canadian steel company is part of Essar Steel's global expansion plan after it signed an agreement with two Vietnam firms in February this year to build a $527 million hot strip mill plant in that country.

The deal also marks the third mega merger and acquisition involving an Indian in the recent times after Mittal's $38 billion buyout of European steel giant Arcelor in 2006 and the Tata Group's $12 billion acquisition of the UK-based Corus Group earlier this year.

The Essar bid follows a failed takeover move of Algoma, which specialises in making steel sheets for automotive industry, by Germany's largest steel-maker Salzgitter AG last month.

Shashi Ruia, chairman of Essar Global Steel, said on Monday Algoma "provides us with an excellent platform for the Canadian and North American markets and fits in with our aim of being a global player".