Cleveland-Cliffs shareholder unhappy with Alpha deal

NEW YORK, July 18 (Reuters) - Iron ore pellet maker Cleveland-Cliffs Inc (CLF.N) on Friday defended its proposed acquisition of coal miner Alpha Natural Resources Inc (ANR.N) in the face of opposition from its largest shareholder.

The company said it was aware of a filing on Thursday with the U.S. Securities and Exchange Commission by the institutional shareholder, which it did not name.

"While the company understands and would expect this shareholder to evaluate ... Cleveland-Cliffs' financial condition and prospects, Cleveland-Cliffs also maintains its belief that the acquisition of Alpha Natural Resources is compelling," it said in a statement.

According to a 13D SEC filing, hedge fund Harbinger Capital Partners, which said it owns 18.36 percent of Cleveland-Cliffs common shares, expressed concern about whether the Alpha deal was in the best interest of shareholders.

Cleveland-Cliffs said on Wednesday it had agreed to acquire Alpha, expanding its coal assets to capitalize on the boom in the global steel industry. The company said at the time the cash and stock deal was worth almost $10 billion.

But Cleveland-Cliffs stock fell almost 10 percent on Wednesday and the deal is now worth around $8.27 billion.

Both boards have approved the deal, but the transaction needs approval of Cleveland-Cliffs and Alpha shareholders.

In Harbinger's filing, the hedge fund said it believed the transaction "is not in the best interest of shareholders."

It said it might "take positions with respect to potential changes in operations, management, board composition, ownership, capital structure, strategy and future plans."

It gave no details and no one was available at Harbinger on Friday to say whether it would try to block the deal.

In its statement, Cleveland-Cliffs said it was "committed to providing the most shareholder value over the long term and firmly believes the proposed transaction is in the best interests of all of its shareholders."

Cleveland-Cliffs understands "the shareholder's right to change its intentions or develop possible proposals, as it deems appropriate."

It said Cleveland-Cliffs and Alpha management teams would meet with shareholders to stress the merits of the deal. (Reporting by Steve James; Editing by Brian Moss) (steve.james@thomsonreuters.com; +1 646-223-6013; Reuters Messaging: steve.james.reuters.com@reuters.net))