ArcelorMittal sticks to offer deadline as rival raises bid

TORONTO - Even as ArcelorMittal stuck to its Thursday night deadline of friendly takeover offer of $492 million to Canada’s Baffinland Iron Mines Corporation, rival Nunavut Iron Ore upped its hostile bid to $1.40 share to buy 50.1 percent stake in it.

Since Nunavat, which was floated by a former Baffinland executive just recently to attempt a hostile takeover, already owns 10 percent stake in Baffinland, its amended offer Wednesday amounts to $273 million.

Both ArcelorMittal and Nunavat are eying Toronto-based Baffinland because of its huge 365 million tonnes of iron ore reserves at its Mary River project in far northern reaches of Canada.

It is estimated that the Mary River project can produce 18 million tonnes of iron ore annually for up to two decades.

According to investment bank Jennings Capital Inc., the project is “possibly the best undeveloped iron ore deposit in the world.”

If ArcelorMittal succeeds to acquiring Baffinland, it will have to shell out $4 billion to bring the Mary River project on stream.

Baffinland’s board of directors and its largest shareholder Resource Capital Funds favour ArcelorMittal over Nunavut because Nunavat’s senior executive Jowdat Waheed worked for it (Baffinland) just before launching the hostile bid.

Baffinland accuses Waheed of breaking confidentiality agreements.

As the deadline for ArcelorMittal’s offer to expire loomed, Nunavat chairman Bruce Walter told the local media, “We are looking to appeal to those (shareholders) who might have been sitting on the fence. Hopefully the additional consideration we’ve added today will sway those people into our camp.”

Since Nunavut has extended the deadline for its offer till January 10, it can make another offer if shares tendered to its bid do not meet the 50 per cent plus one threshold, according to the local media.

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