ArcelorMittal, the largest producer of steel, raised its cash offer for Baffinland Iron Mines Corp. to C$1.25 ($1.23) a share and said the target company’s board supports the increased price.
The offer for all of Baffinland’s shares and all of its 2007 warrants would make the deal worth more than C$492 million, Daniella Dimitrov, Baffinland vice chairman, wrote in an e-mail. The bid has been extended until 11:59 p.m. Toronto time on Dec. 29 and represents a 14 percent premium to the original bid, Luxembourg-based ArcelorMittal said in a statement. Warrant holders will get C$0.10 per warrant, Baffinland said.
The minimum acceptance condition for the purchase has been lowered to 50 percent plus one common share, Arcelor said. About 25 percent of Baffinland’s stock has been tendered.
ArcelorMittal aims to boost self-sufficiency in raw materials as prices for iron ore and coking coal surge on demand from China. The company said in September it planned to spend $4 billion to increase iron-ore production to 100 million metric tons a year by 2015, from 60 million.
On Dec. 16, Nunavut Iron Ore Acquisition Inc. raised its offer to C$1.35 a share for 50.1 percent of Toronto-based Baffinland, compared with ArcelorMittal’s Nov. 8 price of C$1.10 a share for the whole company. Toronto-based Nunavut previously made an offer of 80 cents.
“We believe our offer is clearly superior to Nunavut Iron’s partial and incomplete offer because it does not expose the remaining shareholders with financing risk for the project and potential dilution to their investment,” Peter Kukielski, Arcelor’s head of mining said in the statement.
Baffinland’s Mary River project contains reserves of 365 million tons of iron ore, ArcelorMittal said in a November statement. Prices for iron ore, a key steelmaking ingredient, almost doubled in the April quarter and gained more than 20 percent in the June-to-September period.
Baffinland rose 4 cents, or 3.1 percent, to C$1.32 in Toronto Stock Exchange trading on Dec. 17. The shares have more than doubled this year.
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