ArcelorMittal again extends bid for Canadian ore company
By Gurmukh Singh, IANSTuesday, January 11, 2011
TORONTO - Global steel giant ArcelorMittal and rival bidder Nunavat Iron Core extended their competing bid deadlines for Toronto-based Baffinland Iron Mines Tuesday.
While Nunavut extended its offer from Jan 10 to Jan 25, ArcelorMittal - whose deadline expired midnight of Monday - pushed it Jan 21.
The two companies have been involved in a tough battle since September for control of Baffinland which owns a huge iron ore project in Canadian Arctic regions.
ArcelorMittal’s current offer of $1.40 a share - which was hiked after the expiry of its previous offer of $1.25 or total of $492 million - for 100 percent control of Baffinland amounts to $550.7 million. ArcelorMittal is led by London-based industrialist L.N. Mittal.
On the other hand, Nunavat Iron Ore, which already owns 10 percent stake in Baffinland, is seeking another 50 percent share at $1.45 apiece. Its offer also amounts to $550.7 million.
Nunavut Iron Ore, which is a subsidiary of the US Energy and Minerals Group, Monday sweetened its offer by including one exchange right per common share. As per this amended offer, the shareholder would get 0.4 percent of a share purchase warrant from each exchange right.
An ArcelorMittal spokesman disputed the rival’s amended offer as violative of regulatory rules, and maintained that his firm’s offer was better for Baffinland shareholders.
ArcelorMittal reportedly has a guarantee of a quarter of its shares.
“Their minimum condition is 45 percent, so therefore ArcelorMittal would be looking for an additional 20 percent of the shares to be tendered in order to meet its minimum,” Baffinland vice-chair Daniella Dimitrov told a TV channel Monday.
The Baffinland board of directors has repeatedly asked its shareholders to accept the offer from the world’s biggest steel company.
Baffinland is important for ArcelorMittal for its future supplies of iron ore as the Toronto-based company owns 365 million tonnes of the precious ore at its Mary river site in far northern parts of Canada. Once it goes on stream, the Mary river project can supply 18 million tonnes of iron ore annually for up to two decades.
Investment bank Jennings Capital Inc says the project holds “the best undeveloped iron ore deposit in the world”.
The battle for Baffinland began in September with Nunavat mounting its hostile bid with an offer of 80 cents a share and then ArcelorMittal entering the fray with its offer of $1.10 a share.
