I think Cliffs is signaling that they may not put in an offer for KWG at all. I suspect it is a bluff and their plan would be to try to wrap up Spider before they move on to KWG. I cannot see Cliffs letting KWG get away. At upwards of a billion dollars of revenue a year the 1% NSR alone should be worth more than the Cliffs offer.

Requesting KWG to discontinue the valuation is probably a good strategy from Cliffs perspective. It leaves Spider shareholders with the option of tendering at $16.5 cents per share or accepting 1.21 KWG shares per share which now lack the backing of an offer and may drop in value at least in the short term. KWG is also put in a tight spot as in order to offer more for Spider they have to give the Spider shareholders a bigger share of the combinded properties than the KWG shareholders, while the assets being combined by the two companies are essentially equal in value.

Cliffs probably also wants to avoid having the KWG valuation come out as it would serve as a benchmark for the Spider value. The reason for this is that with the exeception of the NSR and railroad right of way, KWG and Spider are pretty much twins as each owns equal portions in almost all of thier properties. If the valuation showa that KWG (less the NSR and railroad route) is worth more than 20 cents per share (I expect it to much greater than this) by extension it would seem that the Cliffs offer for SPQ is still quite inadequete and it could influence Spider shareholders to accept the KWG offer or hold out for more.

My thoughts.