Source: The Canadian Press

The private equity fund trying to buy Baffinland Iron Mines Corp. (TSX:BIM) struck a deal late Wednesday with the Ontario Securities Commission to allow its hostile bid to go ahead.

The regulator had sought to block Nunavut Iron Ore Acquisition Inc. from making its offer.

Under the agreement with the commission, Nunavut Iron Ore will amend its plan to issue warrants to shareholders as part of its proposal.

Nunavut Iron has offered $1.45 per share for Baffinland, while ArcelorMittal, the world’s largest steel company, has offered $1.40 per share in a friendly deal.

However, ArcelorMittal is seeking all of Baffinland’s shares, while Nunavut Iron only wants to increase its stake in the company to 60% from about 10%.

Shares in the company were down a penny at $1.44 on the Toronto Stock Exchange on Wednesday.

Baffinland said it continued to support the ArcelorMittal offer, but declined further comment.

The two suitors are fighting to gain control of Baffinland’s Mary River project on northern Baffin Island, which contains 865 million of tonnes of iron ore.

The company wants to build a mine about 1,000 kilometres northwest of Iqaluit.

The Nunavut Iron offer values Baffinland at about $570 million, while the ArcelorMittal offer is worth about $550 million.

Nunavut Iron, a subsidiary of private equity fund Energy & Minerals Group, had originally offered 80 cents cash per share, but increased its own hostile takeover bid to $1.45 per share late last week.

The directors and senior executives of Baffinland as well as the company’s largest shareholder, Resource Capital Funds, have entered into agreements with ArcelorMittal to tender their shares and warrants. Resource Capital Funds currently owns 23%.

ArcelorMittal, the world’s largest steel producer, has been building up its iron ore reserves as it seeks to protect itself against price increases.

The world’s three biggest iron ore suppliers earlier this year decided to price their contracts on a quarterly basis rather than an annual one, making steel producers more vulnerable to sudden prices changes.