Cleveland, Ohio, US-based metallurgical coal and iron ore pellet producer Cliffs Natural Resources Inc. (Cliffs) on May 31 announced that its wholly-owned subsidiary 7557558 Canada Inc. has commenced a formal offer for the common shares of Spider Resources Inc. (Spider) at a price of CA$0.13 in cash per common share. The offer expires on July 6, 2010 at 5:00 p.m.
As SteelOrbis previously disclosed, this represents a premium of 62.5 percent over the closing price of the common shares of Spider on the TSX-V on May 21, 2010, corresponding to a total value for Spider of CA$86 million (US$79.9 million). Cliffs holds an aggregate of 19,642,500 common shares, representing approximately three percent of the issued and outstanding common shares on a fully-diluted basis.
Cliffs announced on May 24 that it intends to make takeover bids pursuant to which Cliffs or an affiliate would acquire all of the common shares of KWG Resources Inc. (KWG) and/or Spider Resources Inc. (Spider) which are not owned by Cliffs or its affiliates. Both companies hold a 26.5 percent stake each in the Big Daddy chromite project in Northern Ontario. The proposition was followed by KWG and Spider entering into a binding letter agreement regarding a proposed merger between the two companies.
Cliffs' objective, which can be achieved by acquiring either KWG or Spider, is to obtain majority ownership of the Northern Ontario-based Big Daddy chromite project. The company currently holds a 47 percent stake in this project.