DEALTALK-Nunavut says it won’t give up fight for Baffinland

* Asks regulator to stop Baffinland’s rights plan

* Nunavut says market supports its C$1.35/share bid

* Baffinland says Arcelor deal better value

* Baffinland shares down 0.76 percent at C$1.31 on TSX

By Julie Gordon

TORONTO, Dec 20 (BestGrowthStock) – Nunavut Iron Ore said on Monday
it had applied to regulators to block a new shareholders rights
plan announced by Baffinland Iron Mines (BIM.TO: ) and that it
would not drop its plan to buy a controlling stake in the
exploration company.

The move is the latest chapter in a bidding war pitting
Nunavut, backed by a U.S. private equity firm, against
ArcelorMittal (ISPA.AS: ), the world’s largest steelmaker.
Baffinland, their Toronto-based target, holds a vast iron ore
deposit in the Canadian Arctic.

The board of Baffinland has turned its back on Nunavut’s
C$1.35-a-share offer, valuing the company at about C$467
million ($437.7 million), and embraced a deal with Arcelor,
which has sweetened its bid to C$1.25 a share.

Nunavut said the new rights plan, announced on Saturday,
ran counter to intent of the Ontario Securities Commission when
the regulator blocked a previous “poison pill” plan put forward
by Baffinland’s board.

“It is inexcusable for the Baffinland board to be
disenfranchising their shareholders and not letting them have
the choice,” said Nunavut Chairman Bruce Walter in an interview
with Reuters.

Baffinland’s board on Saturday said it endorsed
ArcelorMittal’s sweetened offer, accepting a higher break-up
fee to be paid if the deal falls through, and said it would
adopt an antitakeover defense against unwanted suitors.

But Nunavut’s Walter said investors were showing their
support for his company’s offer by bidding up the shares.

“The stock is trading above $1.30 – if the market were
viewing our bid as a somehow negative event … you wouldn’t
see the stock trading the way it is,” Walter said.

Shares of Baffinland were down slightly at C$1.31 on Monday
on the Toronto Stock Exchange, but much higher than the closing
price of 56 Canadian cents the day before the first bid was
announced.

In September, Nunavut offered 80 Canadian cents a share for
Baffinland. Arcelor countered with an offer of C$1.10.

WHICH BID IS SUPERIOR?

Arcelor said on Monday that its offer for the Canadian
junior miner was superior because it was for 100 percent of
Baffinland shares. The sweetened offer, announced on Saturday,
lowered the minimum number of shares needed to complete the
deal to 50 percent plus one share but Arcelor pledged to
purchase all shares tendered.

Nunavut’s offer is restricted to 50.1 percent of the
shares, as the company cut the percentage it would require to
complete a deal down from two-thirds.

“We don’t need to get into a fight as to whether our bid is
viewed as superior or not,” said Walter. “All we’re asking for
is that shareholders be given the opportunity to choose.”

But Baffinland’s acting chief executive, Richard McCloskey,
said the board was supporting the Arcelor offer because it
guaranteed C$1.25 per share for all outstanding shares.

“That C$1.25 is the best bid on the table right now,”
McCloskey said in an interview on Monday. “And we’re supporting
that bid with our own shares.”

McCloskey said the Nunavut offer would see 50 percent of
shares going for the full C$1.35, while the other 50 percent
would be left to the open market to value.

Walter said the Nunavut management team has a “considerable
understanding on what’s involved in bringing large projects
into production” and could provide added value for existing
Baffinland shareholders going forward.

At stake is the Mary River project in the remote Canadian
territory of Nunavut, which will cost an estimated C$4 billion
to develop. The deposit, located on Baffin Island, is believed
to hold enough ore to supply all of Europe.

Nunavut, owned by U.S. based-Iron Ore Holdings LP, was
formed in August specifically for the purpose of bidding on
Baffinland. Both Nunavut and its parent are backed by the
Energy and Minerals Group, a private equity investor.
($1=$1.017 Canadian)
(Additional reporting Pav Jordan; Editing by Frank McGurty)

DEALTALK-Nunavut says it won’t give up fight for Baffinland