The fight between ArcelorMittal and Nunavut Iron Ore Acquisition Inc. for control of Baffinland Iron Mines Corp is heating up as the latter has now made a higher offer of $1.45 a share for the Toronto-based company.
ArcelorMittal had on Friday raised its offer from $1.25 to $1.40 to beat rival Nunavat Iron Ore Acquisition Inc's $1.35.
The Luxembourg-based steel giant hiked its offer after the expiry its previous offer of $1.25 or $492 million passed Thursday mid-night. Its new offer amounts to $550.7 million.
But Nunavat, which was formed by a former Baffinland executive just to launch a hostile bid and is backed by American equity firm Energy & Minerals Group, is no mood to relent as it has raised its offer to $1.45 a share for a 60% stake in Baffinland.
Thus, Nunavat's new offer values Baffinland at $570 million - $20 million higher than ArcelorMittal's offer. Nunavat already owns 10% stake in Baffinland.
Both the companies have set the deadline of January 10 for Baffinland to accept their new offers.
ArcelorMittal and Nunavat are fighting for control of 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."
The battle for Baffinland began in September when Nunavat mounted its hostile bid with an offer of 80 cents a share. ArcelorMittal entered the fray with its offer of $1.10 cents - which was later raised to $1.25.
But Baffinland's board and its largest shareholder Resource Capital Funds have all along favoured 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 when he engineered bid for its hostile takeover.