Although this is purely a guess, if KWG does just up the share exchange ratio on SPQ shares for the merger, then one funny thing will have come out of it. By putting in such a low-ball o6ffer (at 16.5 cents), Cliffs effectively made a move that hurt themselves indirectly.

With the closing prices today of 13 cents and 16.5 cents, KWG can up the ratio to 1.31. For every share of SPQ tendered, the holder will receive 1.31 shares of KWG. That would work out to an implied valuation of slightly over 17.0 cents per share for SPQ shares, which is a new Superior Offer, trumping Cliffs.

Had Cliffs actually be less tight-fisted and come out with say 20 cents instead of 16.5, KWG would have had to come out with a much higher ratio (over 1.55). That would have been a lot more divisive. As it stands now, the Cliffs strategy should be to split the shareholders of KWG and SPQ. A higher ratio would have made KWG shareholders feel more like they are getting the raw end of the deal.

After the fully-diluted share base is taken into consideration, raising to 1.31 wouldn't value the KWG share of the new merged company very much lower than the SPQ share of the new company.

If this is in fact the way that KWG responds, then Cliffs will need to come out with another higher offer for SPQ, then KWG can do the same thing again, and by that time it will almost be time for the Merger Vote meeting. Cliffs will have time to put in one last offer before the vote.

All speculation, of course ...