Backing ArcelorMittal once again, Toronto-based Baffinland Iron Mines Corporation has asked its shareholders to reject the higher offer by rival Nunavat Iron Ore Acquisition Inc and opt for the world's biggest steel company.
Nunavat made its offer of $1.45 a share at the weakend against ArcelorMittal's $1.40 a share for the Toronto company.
ArcelorMittal made the new hiked offer to $1.40 after the expiry of its previous offer of $1.25 or $492 million passed last Thursday night. Its new offer amounts to $550.7 million.
On the other hand, since Nunavat already owns 10% stake in Baffinland and is seeking additional 50% of its shares, its offer amounts to $570 million.
With both the rivals setting the deadline of Jan 10 for acceptance of their offers, Baffinland's board of directors here said that it reviewed Nunavat's new offer Monday and "determined that the offer by ArcelorMittal being made for 100% of Baffinland's common shares for $1.40 in cash per share ...remains in the best interests of Baffinland, (and) its shareholders.''
The Baffinland board is opposed to its takeover by Nunavat as that company - backed by American equity firm Energy & Minerals Group - was floated by its (Baffinland's) former executive to mount a hostile bid in September. Baffinland accuses that executive - Jowdat Waheed - of breaking confidentiality agreements.
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.