A majority of Baffinland Iron Mines shares have been tendered to a $590-million takeover bid by ArcelorMittal , all but clinching the No. 1 global steel maker's acquisition of a giant Arctic iron ore deposit.
Luxembourg-based Arcelor said on Tuesday shareholders representing 61 per cent of Baffinland shares tendered to the bid, and that it had extended the C$1.50-a-share offer until Feb. 4 so shareholders who have not yet tendered can do so.
The bid requires two-thirds of Baffinland's shares to be tendered in order to complete the acquisition.
Arcelor and a second bidder, Nunavut Iron, battled for control of Baffinland's Mary River deposit for four months before agreeing in mid-January to make a joint bid, which had expired at midnight on Monday.
"They've got a very good bite on it now, so I think that people should be thinking about tendering to the offer under the new deadline," said Peter Campbell, senior mining analyst at Jennings Capital in Toronto.
"I think that there's not much point now in not tendering."
The huge deposit will help ArcelorMittal meet its goal of becoming less dependent on dominant iron ore producers such as BHP Billiton and Vale SA to feed its steel mills. It could contain enough iron ore to supply European steel mills for years.
The takeover underscored the intensifying race for resources as China, India and other emerging countries build roads, bridges and housing to meet the needs of their growing and more affluent populations.
ArcelorMittal and Nunavut Iron will own 70 per cent and 30 per cent of Baffinland, respectively, once the takeover is completed. Between them, they already had some 35 per cent of the shares locked up in support of the bid.
The Baffinland board has recommended shareholders accept the offer, and its share prices eased toward the bid price over the past week as the chances of an 11-hour counterbid faded.
The stock opened at $1.50 on Tuesday, more than four times higher than before the takeover battle began in September, when the stock was at 35 cents.
The share price had risen as high as $1.58 before Arcelor and Nunavut ended their rivalry.
The value of the deal is small by global standards. Cleveland, Ohio-based Cliffs Natural Resources agreed this month to buy Canada's Consolidated Thompson Iron Mines , which is already producing iron ore, for $4.07-billion.
By contrast, the Mary River project - in northern Baffin Island in the territory of Nunavut - will cost as much as $4-billion to develop and won't go into limited production until early 2013 or later.
Its relative proximity to key European ports means it could displace Europe's traditional suppliers, even though ice-breaking bulk carriers will be needed to transport the ore.
Arcelor's partner, Nunavut Iron, is backed by the Energy and Minerals Group, a $2-billion U.S.-based fund that specializes in financing development of major resource assets.