ArcelorMittal forced to up bid for Canadian iron-ore giant

TORONTO - ArcelorMittal’s battle to take over Canada’s Baffinland Iron Mines took an interesting turn Sunday after it was forced to raise its friendly bid by 14 percent to $1.25 per share when rival Nunavat Iron offered $1.35 per share to buy 50.1 percent stake in it.

ArcelorMittal, which previously offered $1.10 per share or $433 million to take over Baffinland Iron Mines, has now extended its bid till December 29.

Toronto-based Baffinland Iron Mines owns the huge Mary River iron-ore project on Baffin Island in Nunavut union territory.

As prices of iron ore has shot up more than 20 percent since June, ArcelorMittal is eying an estimated 365 million tonnes of iron ore reserves at the Mary River project to secure its future supplies.

The project has the potential to produce 18 million tonnes of iron ore annually for up to two decades.

ArcelorMittal mounted its bid to acquire Baffinland as the Canadian company doesn’t have $4 billion needed to bring the Mary River project into production.

Since Baffinland’s stock holders has decided in favour of ArcelorMittal because of its better terms of offer, the rival Nunavat Iron has made a superior offer of $1.35 per share to buy 50.1 percent stake in it.

To prevent ArcelorMittal from taking over Baffinland, Nunavat Iron Sunday also demanded an emergency hearing by the Toronto-based Ontario Securities Commission to stop shareholders’ rights plan - also known as a poison pill - under which Baffinland’s board can refuse to consider the rival bid and accept ArcelorMittal’s offer.

“Unless set aside, the poison pill will prevent shareholders from considering Nunavut Iron’s current offer or any increased offer,” Bruce Walter, chairman of Nunavut Iron, was quoted as saying by the National Post daily Sunday.

“This action is particularly offensive for shareholders when it is clear many in the market have indicated that Nunavut Iron’s offer already delivers greater value than the modest increase to its offer proposed by ArcelorMittal,” he said.

Nunavut said its deal is better because it will assure future royalties for minority shareholders.

But ArcelorMittal said its deal is better for shareholders as it will not only pay for all the shares but also take care of future risks associated with the project.

“We believe our offer is clearly superior to Nunavut Iron’s partial and incomplete offer. In contrast to the Nunavut Iron offer, our offer provides certainty to all shareholders of Baffinland,” the newspaper quoted Peter Kukielski, ArcelorMittal’s head of mining, as saying.

ArcelorMittal has now extended its bid for Baffinland till December 29.

(Gurmukh Singh can be contacted at gurmukh.s@ians.in)