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Baffinland Iron Mines agreed Wednesday to drop an anti-takeover plan that it put in place to protect itself from a hostile bid from Nunavut Iron Ore, a company formed specifically to buy Baffinland and gain control of its rich Canadian iron ore deposit.

European steel giant ArcelorMittal , which is making a friendly takeover bid for Baffinland, also agreed at a hearing of the Ontario Securities Commission (OSC) to dropping the poison pill takeover defence. The OSC had called the hearing to review the merits of the new poison pill. It was set to issue a statement on the matter later Wednesday.

The OSC struck down a previous pill in November, which Baffinland adopted to stave off Nunavut's initial hostile bid for the company, which holds a huge iron ore deposit in the Canadian Arctic.

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Nunavut, backed by a U.S. private equity group, has bid $1.35 a share for a 50.1-per-cent stake in the company.

ArcelorMittal, the world's biggest steel maker, has offered $1.25 a share for all of Baffinland's shares, a bid that is backed by the Baffinland board.

Baffinland's former chief executive officer, Gordon McCreary, who owns a 2.4-per-cent stake in the Toronto-based company, is opposed to both deals.

He said that he is working with an unnamed Chinese state-owned company on a rival bid for Baffinland.

"They are in an advanced state here," he said, referring to the unnamed bidder. "But there are political issues to get them to move forward."

He added that he was pushing for an announcement from the Chinese company before the ArcelorMittal deal expires on Dec 29.

"The opportunity is substantially more than where we are at this time," said Mr. McCreary of the value of the potential Chinese offer.

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