Steelmaker Arrium has rejected a $1.19 billion takeover offer from a consortium of Asian steel companies.

Arrium, formerly named OneSteel, had already rejected a $1 billion offer from the consortium, headed by Hong Kong commodities trader Noble Group and South Korean steel giant POSCO.

The Asian companies lodged an increased bid late on Tuesday, which retained similar conditions to its original bid, such as its need to carry out due diligence and to arrange debt financing.

Arrium’s board has rejected the offer after a careful review.‘‘We believe that the revised proposal significantly undervalues Arrium and is not in the best interests of Arrium shareholders,’’ chairman Peter Smedley said in a statement.

‘‘We also believe that the highly conditional nature of the proposal carries significant risk.’’

The company's shares initially jumped more than 6 per cent after coming out of a trading halt at 1pm, but the enthusiasm waned rapidly and shares were flat at 80 cents in early afternoon trade.

In statements to the ASX this morning, Arrium – which was until recently known as OneSteel – said the bid was a “revised acquisition proposal”, suggesting a new bid had come from the same foreign consortium that bid for the company in early October.

An initial offer price of 75 cents per share was rejected earlier this month, and a second attempt at the same price was rebuffed last week.

Arrium has consistently said it will not consider improvements to peripheral conditions of the offer unless there is an improvement to the 75 cent offer price.

Investors seem to believe an improved offer will be forthcoming, having pushed the Arrium share price above 75 cents for most of October. The stock closed at 80 cents last night.

Speaking before the rejection of the bid was announced, Credit Suisse analyst Michael Slifirski said the consortium would need to offer closer to $1.10 per share to be taken seriously.

But he cautioned that the takeover could struggle to win approval from the Foreign Investment Review Board (FIRB) given that some of Arrium’s iron ore assets are located within Defence Force land in outback South Australia.

“We still cannot see how the FIRB could approve the acquisition given the very strong precedents already established in rejecting foreign acquisitions in the green and amber zones of the Woomera military zone,” he wrote, in a research note this morning.

Arrium will virtually double its iron ore production over the next year, and also has a growing international business in making grinding balls that are sold to mining companies to help crush ore.

Those growth assets accompany the traditional steelmaking assets at Whyalla in South Australia.

With AAP