Cleveland-Cliffs gets investor support for $4 billion merger

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COLUMBUS, Ohio - A hedge fund lost the fight to double its holdings in Cleveland-Cliffs Inc. on Friday, a move that would have allowed it to block the iron ore miner's $4 billion buyout of Alpha Natural Resources.

Cleveland-Cliffs shareholders on Friday voted against the request by Harbinger Capital Partners to buy up to a third of the company's shares. Harbinger needed shareholder backing under state law.

Harbinger owns about 16.6 million shares, or 15.57 percent, of Cleveland-Cliffs, whose Michigan operations include the Empire and Tilden mines in the Upper Peninsula.

Harbinger believes the Alpha deal is risky.

Cleveland-Cliffs said excluding Harbinger's shares, approximately 80 percent of the votes were against allowing Harbinger to buy a bigger chunk of the company.

''We are pleased Cliffs' shareholders voted to retain their right to provide meaningful input on the future strategic decisions of the company,'' Joseph A. Carrabba, Cliffs' chairman, president and chief executive, said in a statement.

The value of the deal has plummeted from $10 billion, when it announced in July, to about $4 billion as Cleveland-Cliffs' stock has deteriorated. Cleveland-Cliffs shares have lost two-thirds of their value as commodity prices have fallen away over the past two months.

Cleveland-Cliffs shares jumped 13 percent, or $5.08, to $42.85 in midday trading. Alpha Natural shares soared 18 percent, or $7.15, to $47.65.

Cleveland-Cliffs announced its bid for Alpha Natural on July 16. Under the deal, Alpha shareholders would get 0.95 Cleveland-Cliffs shares and $22.23 in cash for each share.

Cleveland-Cliffs needs affirmative votes from the holders of two-thirds of all shares for the deal to go forward under Ohio law. If Harbinger had been successful, it, in essence, would have been able to block the deal by voting its shares against the plan.

Harbinger said in a statement Friday that it was not its intent to gain control of the company. Harbinger continues to oppose the deal, saying it ''represents a profound strategic mistake which places the future of the company at substantial risk.''