Nunavut Iron Ore raises bidding war for Baffinland with ArcelorMittal

The takeover battle for Canada's junior iron ore explorer Baffinland Iron Mines intensified after Nunavut Iron Ore raised its hostile bid to $1.35 a share in cash, trumping a $1.10 a share offer from the world's largest steelmaker ArcelorMittal.

Nunavut raised its September 2010 offer of 80 cents per share (See: PE firm launches hostile bid for Canada's Baffinland Iron Mines)  to $1.35 per share for 50.1 per cent of Baffinland, representing a premium of 23 per cent, and extended its offer until 30 December 2010.

Energy & Minerals Group, which already holds a 6 per cent stake in Baffinland, said that it purchased an additional 1.6 per cent of the outstanding common shares this week through the Toronto Stock Exchange and other markets taking its total holding in Baffinland to 7.6 per cent.

Baffinland responded to Nunavut latest offer by saying, "The special committee of the board of directors and the board of directors itself are reviewing the amended offer with their financial and legal advisors and will respond in due course."

But Luxembourg-based ArcelorMittal, dismissed the latest offer by Nunavut and said that its bid is superior under the takeover agreement signed with shareholders and directors of Baffinland on 8 November 2010.

Nunavut, a special purpose vehicle created for the acquisition of Baffinland by the $2-billion private equity firm Energy & Minerals Group, had, in September 2010, launched an 80 cents per share hostile bid for Baffinland, valuing the Toronto-based miner at C$274 million.