Cliffs Natural Resources: Trouble in Mergertown (CLF, ANR)

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The proposed merger between Cliffs Natural Resources (NYSE:CLF) and Alpha Natural Resources (NYSE:ANR) has run over more than a few bumps. Cliffs’ largest shareholder, Harbinger Capital, tried to acquire enough shares to block the deal. The big stumbling block, though, has been the deteriorating share prices of both companies. When the merger was announced in July, it was worth $10 billion. A couple of weeks ago, the value had dropped to $4 billion.

Yesterday, Cliffs announced that it was moving its shareholder vote onthe merger from November 21st to December 19th. The company said thatit "rescheduled the meeting to allow shareholders adequate time toconsider new information on the financial benefits of the pendingtransaction." Alpha immediately filed suit, claiming that the Novemberdate was the agreed upon date for both companies to put the merger to ashareholder vote.

Filing lawsuits doesn’t seem like the best way to start a marriage.Still it’s nothing personal. It’s just business. As Don Corleone wouldsay.

Paul Ausick
November 4, 2008