Cliffs Natural Resources Inc., a U.S. based international mining giant, on Tuesday made an offer of $4.9 billion for Thompson Iron Mines. The takeover bid raised the shares in the Montreal based Consolidated Thompson Iron Mines by 30%.
Thompson Iron Mines have just begun production on their Lac Bloom iron ore mining project which took $800 million to develop. The deal offered by Cliffs has the support of the directors of Consolidated Thompson which is led by Brian Tobin.
Brian Tobin was the former premier of Newfoundland. The deal also is supported by the Chinese Wuhan Iron and Steel Corporation which owns a 19% stake in Consolidated Thompson. It also has a direct ownership share in the Lac Bloom iron ore mine located in Quebec near the Labrador border.
Cliffs is offering $17.25 per share in cash, which was a 30 per cent premium to Consolidated Thompson's share price. The Consolidated Thompson board of directors is recommending the deal to all shareholders. Some senior managers and directors have also signed lock up pacts.