Baffinland backs joint ArcelorMittal - Nunavut C$590-mn bid

The four-month battle for the control of Baffinland Iron Ore Mines ended yesterday after the board of the Canadian miner backed the surprise C$590-million joint-takeover bid from steel giant ArcelorMittal and Nunavut Iron Ore Acquisition Inc.

The board of Toronto-based Baffinland advised its shareholders to accept the joint bid after both suitors had put forward a sweetened offer of C$1.50-a-share for 100 per cent of the company on 14 January. (See: ArcelorMittal to jointly bid with rival Nunavut for Canadian miner Baffinland)

The offer represented a premium of 168 per cent to Baffinland's stock price on 22 September, a day before Nunavut made a hostile offer of 80 Canadian cents a share.

Under the deal, Luxemburg-based ArcelorMittal will own 70 per cent of Baffinland and Nunavut, which is backed by the $2-billion Houston-based private equity firm Energy & Minerals Group, will own the remaining 30 per cent.

Immediately after the joint bid was tabled, Baffinland's chairman and CEO Richard McCloskey, who had earlier supported ArcelorMittal's offer, said that he does not support the joint bid because he believes it is unfair to the company's other shareholders.

The board of Baffinland had earlier supported ArcelorMittal's offer and along with its largest shareholder Resource Capital Funds, had agreed to sell their combined 25 per cent stake exclusively to ArcelorMittal under a 'lock-up agreement.'