Brazil's Camargo Correa Group must present a counterbid to take over cement maker Cimpor or withdraw its merger proposal, Portugal's stock market regulator (CMVM) told the company on Saturday.

Camargo Correa -- a civil construction and real estate conglomerate -- on Wednesday offered to merge its cement business with Cimpor and buy a stake of between 15 and 25 percent in Portugal's largest cement maker.

Cimpor is the target of a takeover offer by Brazil's CSN .

CMVM said in a statement it notified Camargo Correa that it started an administrative process with the purpose of making the latter comply its proposed merger with the rules on counterbids ... or withdraw it.

It said Camargo has 10 days to reply to the demand.

A counterbid has to target at least the same stake as in the initial takeover bid and be at least 2 percent higher than the initial offer under CMVM rules.

CSN is seeking to buy at least 50 percent of Cimpor plus one share at 5.75 euros a share.

Cimpor's board of directors had rejected the bid by steelmaker CSN as hostile and low before Camargo's offer, but CSN said it continued to seek a deal with Cimpor shareholders. Analysts expect CSN to sweeten its initial offer, which valued the Portuguese company at about 3.86 billion euros ($5.57 billion).

After Camargo's offer, CSN complained that Camargo was trying to obtain control of Cimpor under more favorable conditions than those a proper counterbid would have entailed.

Cimpor shares, which ended practically flat on Friday at 6.37 euros and shed just around 1 percent during the week, still trade well above the price offered by CSN as traders expect CSN or its rival to offer more.

(Reporting by Andrei Khalip; editing by Patrick Graham)