Wait before selling out, Baffinland tells shareholders
Board promises response to takeover bid by Oct. 7
Baffinland Iron Mines Corp. is urging shareholders to wait before selling their shares to a company that launched a hostile takeover bid for the junior mining firm Sept. 22.
In a message posted on the company’s website, Baffinland tells shareholders to wait until its board of directors makes a recommendation on the proposed deal by Oct. 7.
Baffinland’s board has convened a special committee to review the all-cash offer of 80 cents a share, issued last month by Nunavut Iron Ore Acquisition Inc., a company set up in August for the sole purpose of buying Baffinland.
But Baffinland said that price is too low. Shares for the company were trading on the Toronto Stock Exchange Sept. 28 at $1.04, close to the one-year high.
“Since the announcement of the hostile bid, Baffinland’s common shares have consistently traded above the offer price of (80 cents),” the company’s website stated.
“Baffinland believes that the performance of the common shares during this period is an indication that the market believes that the hostile bid undervalues the common shares.”
Nunavut Iron Ore’s takeover bid came as a surprise to Baffinland’s board. The offer is on the table until Oct. 28.
Baffinland has been navigating Nunavut’s regulatory process and trying to raise the estimated $4.1 billion needed to develop an iron ore mine at Mary River, along with a railway and port to ship the ore to market.
In June, company representatives said they’re eyeing 2016 to start mining at the site.
Nunavut Iron Ore, which is owned by a Delaware-based holding company, already owns a 6.3 per cent stake of Baffinland.