Baffinland bid deadlines extended

Two companies in a bidding war for Baffinland Iron Mines Corp. and its massive iron ore property in Nunavut have extended their offer deadlines.

European steelmaker ArcelorMittal is competing with Nunavut Iron Ore Acquisition Inc. for control of Baffinland and its Mary River project, which contains more than 865 million tonnes of iron ore on northern Baffin Island.

ArcelorMittal's bid was open for acceptance until 11:59 p.m. ET Monday, but the company has now extended its offer to Jan. 21, a Baffinland spokesperson told CBC News.

Baffinland's board of directors is supporting ArcelorMittal's friendly bid, in which the company is offering $1.40 per share and seeks to acquire 100 per cent of Baffinland.

Nunavut Iron, a subsidiary of the U.S. Energy and Minerals Group, has offered $1.45 per share cash for Baffinland in a hostile takeover bid. Its offer is open to acceptance until Jan. 25.

Rival revises bid

Unlike ArcelorMittal, Nunavut Iron only wants to increase its stake in the company from about 10 per cent to 60 per cent.

On Monday, Nunavut Iron chairman Bruce Walter said his revised offer gives Baffinland shareholders cash up front and the chance to benefit as the company develops the Mary River project.

"The Arcelor offer is what it is, it has no upside whatsoever and frankly it has baffled us that the Baffinland board has continued to support it," Walter told The Canadian Press.

"With our offer, we've attempted to give shareholders the opportunity to both get significant cash, but also to have significant upside with ongoing participation in the project."

Under its offer, Nunavut Iron said Baffinland will also issue 0.4 of a warrant for each share outstanding. Each whole warrant will allow the holder to buy an additional share for $1.40. The warrants issued to Nunavut Iron would then be distributed to shareholders who received exchange rights on a pro rata basis.

The company also said Monday that under its sweetened offer it will pay eight cents per right if Baffinland is unable to issue the warrants by the end of 2011, as anticipated under its plan.

Former executive seeks Chinese deal

Luxembourg-based ArcelorMittal said Nunavut's revised offer was nothing more than a response to concerns by the Ontario Securities Commission last week.

"It does not change anything and is still only for part of the company," said the company, which said it does not plan to raise or extend its offer.

Meanwhile, former Baffinland chief executive Gordon McCreary is continuing work to put together a third option with an unidentified Chinese firm.

McCreary, who stepped down from the Baffinland board in November after ArcelorMittal's friendly deal was announced, believes both of the current offers greatly undervalue the company's potential.

Though he no longer works for the company and holds less than one per cent of Baffinland's stock, McCreary has said both Nunavut Iron and ArcelorMittal are trying to steal the company with their offers.

Demand for iron ore, used in the production of steel, has returned since the recession and the emerging economies of India and China have swung back into high gear.

ArcelorMittal has been building up its iron ore reserves as it seeks to protect itself against price increases in the metal.

The world's three biggest iron ore suppliers decided last year to price their contracts on a quarterly basis rather than an annual one, making steel producers more vulnerable to sudden price changes.