ArcelorMittal slams Nunavut’s partial offer for Baffinland as “coercive”

The battle for control of the Mary River iron ore deposit in the Canadian Artic yesterday escalated after ArcelorMittal, the world's largest maker of steel slammed the partial takeover offer by Nunavut Iron Ore Acquisition for Canada's Baffinland Iron Mines as ''coercive''.

Nunavut, which already holds about 10.5 per cent of Baffinland's shares, has made a hostile takeover offer of C$1.45 a share or C$570 million for 60 per cent of Baffinland, while Luxemburg-based ArcelorMittal has offered C$1.40 a share or C$550 million for the whole of the Toronto-based miner.
Both bids are due to expire on 10 January 2011.

Nunavut's partial offer is not a firm offer, but based on a promise that shareholders could earn more in the future as it contains a warrant component for those shareholders who cannot immediately tender their shares but hold on to it for future value once Baffinland's Mary River iron ore deposit is developed at a cost of C$4 billion.

The warrant component of its offer triggered a scrutiny by the Canadian regulator Ontario Securities Commission (OSC), (See: Canadian regulator steps in to scrutinise Nunuvut's bid for Baffinland) where during the public hearing yesterday Nunavut was forced to either provide more information about the warrants or withdraw the warrant component altogether. http://www.domain-b.com/industry/Mining/20110106_baffinland_oneView.html

Nunavut also cannot take up any shares tendered to its offer that expires on 10 January 2011 and has to extend the amended offer period for a minimum 10 days.
''Nunavut's partial offer is highly conditional and discretionary, and continues to be so,'' said Peter Kukielski, head of mining of ArcelorMittal.

ArcelorMittal said that Nunavut's offer does not give Baffinland shareholders any certainty as to what it is offering as its coercive partial offer will leave shareholders with the prospect of holding thinly traded shares subject to further financing and execution risks.