Cleveland, Ohio, US-based metallurgical coal and iron ore pellet producer Cliffs Natural Resources Inc. (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.
Each of the companies, KWG and Spider, holds a 26.5 percent stake in Big Daddy chromite Project in Northern Ontario. 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.
A company statement said that neither of the proposed takeover bids, which will be funded with Cliffs' existing cash resources, is conditional on the completion of the other.
Cliffs intends to offer a price of CA$0.13 (US$12.07) in cash per both companies' common shares. This represents a premium of 62.5 percent over the closing price of the common shares of both enterprises on the TSX-V on May 21, 2010, corresponding to a total value for KWG of CA$100 million (US$92.9 million) and for Spider of CA$86 million (US$79.9 million).
Both offers were approved by Cliffs' board on May 21.