Cleveland Cliffs At The Precipice

Cleveland-Cliffs Chairman M. Thomas Moore stirred up a hornets' nest when he decided to pick a fight with Tiger Management with no apparent provocation. Tiger is the company's largest shareholder, controlling nearly 10% of the stock.

On Mar. 25, Moore surprised everyone by backing out of an agreement with Tiger announced only four days earlier to expand Cleveland-Cliffs' board from 12 members to 15. The board would have included five new directors acceptable to Tiger. Moore's explanation was that Tiger's agenda is contrary to the interests of Cleveland-Cliffs and its shareholders.

But several Cleveland-Cliffs holders with stakes of over 5% are livid. They say they will support Tiger if it wages a proxy fight. One of them is Don Kennedy, president of money-management firm D. S. Kennedy, who owns over 9%. "I was delighted when the company said it was going to expand the board," he says. "It would have brought in needed vitality."

Tiger, led by highly respected investment pro Julian Robertson, wouldn't say what its next move will be, but it's talking with other big stakeholders. A Tiger spokesperson says Moore's about-face was "a perfect example of a large corporation using shareholder funds to fight shareholder interests."

The upheaval may well put Cleveland-Cliffs into play. Any group interested in buying the company, a major iron-ore processor that manages seven mines in North America, would find an ally in Tiger and other disappointed shareholders. The stock, now at 30, is no higher than it was back in 1981.

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