ArcelorMittal's Baffinland bid deadline looms

The future of Baffinland Iron Mines Corp. could be decided by midnight on Monday if one of two bidders for the company can get enough shares to take it over.

Over the past few months, Baffinland has been the subject of a takeover war between European steel giant ArcelorMittal and Nunavut Iron Ore Acquisition Inc., a subsidiary of the U.S. Energy and Minerals Group.

ArcelorMittal's bid is open for acceptance until 11:59 p.m. ET Monday. If it does not get enough shares by then, ArcelorMittal can drop its offer, extend it or put a new offer on the table.

Baffinland's board is supporting ArcelorMittal's bid, noting that the European company already has a quarter of the shares guaranteed.

"Their minimum condition is 45 per cent, so therefore Acelor would be looking for an additional 20 per cent of the shares to be tendered in order to meets its minimum," Baffinland vice-chair Daniella Dimitrov told CBC News.

Under ArcelorMittal's friendly bid, the company is offering $1.40 per share and seeks to acquire 100 per cent of Baffinland.

Nunavut Iron has offered $1.45 per share for Baffinland in a hostile takeover bid. Unlike ArcelorMittal, it only wants to increase its stake in the company to 60 per cent from about 10 per cent.

The deadline for Nunavut Iron Ore's offer has been extended to Jan. 25.

Not all shareholders may benefit

Baffinland has been working on opening a mine at its Mary River high-grade iron ore project, about 160 kilometres south of Pond Inlet on northern Baffin Island. The property contains at least 865 million tonnes of iron ore.

If ArcelorMittal does not get enough shares by midnight, Dimitrov said it's anyone's guess as to what the two bidders would do next.

"It's been certainly an interesting process and a process that has created, you know, enhanced value for our shareholders from when this process was started," she said.

One of Baffinland's northern shareholders, Nunavut businessman Kenn Harper, said he wished he hadpurchased shares when they were less than 20 cents each.

Still, Harper said hewill gain some money if either takeover bid succeeds, but he warned that not everyone will benefit.

"There's lots of people that are not going to make any money on this and are going to lose substantial amounts," Harper said, referring to shareholders who paid more than $2 or $3 a share not long before the economic downturn began.

Harper said he is concerned that whoever buys Baffinland may mothball the Mary River project, instead of developing it right away and creating jobs for Nunavummiut.

But John Hadjigeorgiou, director of the Lassonde Mineral Engineering Program at the University of Toronto, said he does not believe the mining project will be shelved.

"There is a need, and one of the bids has been really set up in order to develop the operation, so I think they will go ahead," Hadjigeorgiou said.