The drama surrounding iron ore company Cleveland-Cliff Inc.'s $10
billion proposal to buy coal miner Alpha Natural Resources Inc. became even
more interesting Thursday as its largest shareholder, hedge fund
Harbinger Capital Partners, looks to raise its ownership stake in the
company.
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Harbinger is against the proposed deal, contending it is not in the best interest of Harbinger's shareholders. In a filing
with the Securities and Exchange Commission, it is asking the company to
hold a shareholder vote that would allow the hedge fund to acquire at
least "one-fifth or more (but less than one-third) of the corporation's
voting power in the election of directors."
Harbinger currently controls about 15.57% of Cliffs' shares. Without
Harbinger's support it is doubtful a deal with Alpha, or anyone would
get done. In order to win approval under Ohio law, Cleveland-Cliffs
would need two-thirds of the shareholder vote. Though a victory might
be mathematically possible without Harbinger's support, it is unlikely.
While the hedge fund has said it isn't opposed to a transaction in the
coal space, it reportedly thinks this is the wrong time to do a deal and
this one is overpriced. Indeed Harbinger wants Cliffs to consider all
options that would maximize shareholder value, including selling
itself. - Donna Block
See Dealscape: Harbinger digs in for Cleveland-Cliffs fight
See Dealscape: Just In: Advisers for Cleveland-Cliffs and Alpha deal
