UPDATE 1-Baffinland Iron to drop its latest poison pill

* All parties agree to drop rights plan at OSC hearing

* ArcelorMittal says will not extend bid past Dec 29

* Former Baffinland CEO says better bid to come from China

* Shares slip 0.75 percent to C$1.32 on TSX.

TORONTO, Dec 22 (BestGrowthStock) – Baffinland Iron Mines (BIM.TO: )
agreed on Wednesday to drop its plan for defending against a
hostile bid from Nunavut Iron Ore after its friendly suitor
ArcelorMittal (ISPA.AS: ) said it would not extend the Dec. 29
deadline on its C$492 million offer.

At stake is Baffinland’s huge iron-ore deposit in the
Canadian Arctic, which is believed to be large enough to meet
all of Europe’s needs for years.

Baffinland’s move, made at Arcelor’s request, came as the
Ontario Securities Commission issued an order for the company
to end the so-called poison pill defense on Dec. 29 if it was
still in place by then.

“This order removes an obstacle put in place by the
Baffinland board of directors to deny its shareholders the
opportunity to tender to Nunavut Iron’s superior offer,” said
Nunavut Chairman Bruce Walter.

Nunavut, backed by a U.S. private equity group, has bid
C$1.35 a share for a 50.1 percent stake in Baffinland. The deal
values Baffinland at about C$531.4 million ($524.4 million).

ArcelorMittal, the world’s biggest steelmaker, has offered
C$1.25 a share for all of Baffinland’s shares, a bid that’s
backed by the Baffinland board.

While at first glance the Nunavut offer seems to give more
value to shareholders, only about half of Baffinland’s shares
will fetch the C$1.35, while the rest will be priced according
the market. [ID:nN19149286]

Shares of Baffinland have risen 146 percent on the Toronto
Stock Exchange since Nunavut’s first offer in September. Prior
to that offer, Baffinland shares were trading at 56 Canadian
cents.

The OSC struck down a previous pill in November, which
Baffinland adopted to stave off Nunavut’s initial hostile bid
of 80 Canadian cents a share.

LOOMING CHINA DEAL?

With both deals set to expire next week, it is now up to
the shareholders to decide which deal offers more value. But at
least one shareholder is unconvinced by both bids.

Baffinland’s former chief executive, Gordon McCreary, who
owns a 2.4 percent stake in the Toronto-based company, says
neither bid fully values Baffinland and its Mary River iron ore
project, which will cost an estimate C$4 billion to develop.

“This is a rush job here to try to sweep this away before
the end of the year,” McCreary said, “before other parties can
surface and truly add value to shareholders here.”

McCreary said that he is working with a Chinese state-owned
company on a rival bid for Baffinland. He declined to identify
the Chinese entity

“They are in an advanced state here,” he said. “But there
are political issues to get them to move forward.”

He added that he is pushing for an announcement from the
Chinese company before the ArcelorMittal deal expires on Dec.
29.

“The opportunity is substantially more than where we are at
this time,” said McCreary of the value of the potential Chinese
offer.

Shares of Baffinland slipped 0.75 percent to C$1.32 on
Wednesday on the Toronto Stock Exchange.

($1=$1.02 Canadian)
(Reporting by Julie Gordon; editing by Frank McGurty)

UPDATE 1-Baffinland Iron to drop its latest poison pill