TORONTO (CP) - A U.S. hedge fund is claiming Dofasco Inc.’s (TSX:DFS) board breached its duty to shareholders when it agreed to a $215-million break fee should a $5.28-billion takeover offer from ThyssenKrupp AG fall through.

"This value should go to the company’s shareholders, not ThyssenKrupp, and it is the board’s responsibility to remedy this breach in its fiduciary duty," Peter Schoenfeld, CEO of P. Schoenfeld Asset Management LLC, or PSAM, wrote in a letter to Hamilton-based Dofasco.

Schoenfeld accused Dofasco’s board of undermining the bidding process and robbing the steelmaker’s shareholders of at least $1.46 per share in value that would have otherwise accrued.

Analysts have praised Dofasco’s board for luring two European steel giants into a bidding frenzy that has resulted in offers much higher than predicted.

Last weekend, Dofasco agreed to boost its break fee with ThyssenKrupp from $100 million to $215 million, as the German steel conglomerate increased its offer from $63 per share to $68 per share.

That broke a stalemate with the world’s second-biggest steelmaker, Arcelor SA, which promptly raised its $63 offer to $71-per-share on Monday morning.

Desjardins Securities analyst John Hughes said that was a "big credit to Dofasco’s management, who have done an awful lot of closed-door work" to boost the price for the firm.

Dofasco’s executives approached ThyssenKrupp and secured a white-knight offer from the German company within days of Arcelor’s first $56-per-share hostile takeover proposal in November.

Arcelor’s latest bid triggers a clause in the white-knight deal that gives ThyssenKrupp five business days to match any competing offer. If it does not match the $71 bid by Monday, Dofasco will likely have to pay it the $215-million break fee.

In his letter to Dofasco, PSAM’s chief executive said the $100-million break fee represented 2.1 per cent of the offer value, or $1.27 per fully diluted share.

PSAM said it holds 1.6 million Dofasco shares on behalf of its investors, including endowments, foundations and high net worth individuals. That gives it about two per cent of the steelmaker’s stock.

Schoenfeld - whose firm has also flexed its muscles with companies such as Peoplesoft Inc. in the past - writes that he does not consider five business days to be a "considerable period of time" for ThyssenKrupp to top the latest offer.

He adds that "the market was obviously expecting an increased Arcelor bid, despite Arcelor’s lack of communication to that point, with the stock priced at $65.80, indicating an expected offer of $67 or $68.

"Certainly ThyssenKrupp had come to expect an Arcelor bump in the coming days," he continues, having "pressed Dofasco over a 48-hour period to enter into and announce this agreement on a Saturday, a non-business day."

Taking into account the break fee that Arcelor would have to cover if it wins Dofasco, Schoenfeld said its latest bid amounts to $73.73, an 8.4 per cent premium to ThyssenKrupp’s offer.

"It is very clear that the board has undermined the bidding process and robbed the company’s shareholders of at least $1.46 in value that would have otherwise accrued to the shareholders in due time had the board not interfered on behalf of ThyssenKrupp," he added.

With a five per cent drop in auto products, total wholesale sales fell by 0.2 per cent from the previous month despite an otherwise healthy performance in most industries, Statistics Canada reported Friday.

Wholesale sales came in at $40.5 billion. They would have risen by 1.1 per cent from the previous month if not for the auto sector, the agency said.

"Dealers wanting to reduce their inventories contributed to the sharp drop in wholesale sales of motor vehicles in November," Statistics Canada said in a release.

"Another factor contributing to the decrease was that some motor vehicle assembly plants temporarily shut down or cut back their operations in November to reduce the quantity of some models found in their dealers’ inventories."

Regionally, the sharpest drop in auto wholesale sales came in Ontario, where more than 75 per cent of the Canadian industry is concentrated. Motor vehicle parts, however, posted a second consecutive gain, up 5.8 per cent.

"Clearly, many of these automakers are encountering pretty substantial troubles and I think it is going to be a tough time for both the workers and the companies going forward - we’ll just have to see how rough it is," said Eric Lascelles, a strategist with TD Economics.

Industry statistics released Friday by DesRosiers Automotive Consultants showed Canadian vehicle assembly production decreased by nine per cent last year compared with 2004, led by a 40.4 per cent decline at Ford of Canada and a nine per cent drop at General Motors Canada.

Ford Motor Co. is scheduled to announce a major restructuring Monday, which is expected to result in thousands of layoffs and several plant closings in North America.

DaimlerChrysler, however, posted a 22.4 per cent increase, and the Ontario factories of Japanese automakers Toyota and Honda came through the year with 10 per cent growth.

"Keep in mind that auto shipments and sales tend to be quite volatile," Lascelles said. "They’ve been really going up and down pretty wildly over the last few months, and so I’d be hesitant to read too much into any one reading."

The largest sectoral increases came in personal and household goods, up 3.1 per cent and the catch-all "other products" sector, up 2.8 per cent.

"The strength in this component, which includes apparel and home entertainment goods, bodes well for Christmas retail sales," Scotia Capital Research analyst Carolyn Kwan wrote in a research note.

But she added: "Most worrisome about the report, however, is that constant-dollar sales, which feed into the (gross domestic product) estimate, plunged 1.7 per cent."

Combined with a drop in manufacturing shipment volumes, Kwan said, these numbers will likely translate into a weak reading for November’s GDP.

Friday’s wholesale numbers came on the heels of a decrease in manufacturing shipments, down 1.5 per cent to $51.4 billion despite expectations for a modest improvement.

Wholesales in the machinery and electronic equipment sector fell by 0.7 per cent, while farm products dropped 6.9 per cent on wholesale sales of live animals. Together with automotive, these three sectors accounted for 41 per cent of the total.

TORONTO (CP) - The price of commodities was up by almost a third at the end of 2005 compared to a year before but a hot streak that began more than three years ago is likely beginning to cool off a bit, Bank of Montreal (TSX:BMO) economists said Friday.

The bank said its Canadian commodity price index rose 32.8 per cent last year but "the current strong momentum in the overall index is not expected to be sustained through 2006."

Pegged at 219.6 in December, the index follows the price movement of 19 commodities key to Canadian exports and uses the year 1993 to represent a benchmark 100 points. That was up from 165.3 in December 2004.

But "the current strong momentum in the overall index is not expected to be sustained through 2006," the bank’s economic wing said in a release.

"The commodity rally that started in mid-2002 remained in full swing in 2005, defying earlier expectations it would slow down," commented Earl Sweet, assistant chief economist at BMO Financial Group.

"However, performance amongst commodities is likely to be mixed," as it was in 2005, when forest products edged up only 1.8 per cent year-over-year and the prices of agricultural exports advanced a bare 0.9 per cent.

"Looking forward, a projected slowing in housing construction in North America is expected to keep wood product prices on a downward course in 2006," said Sweet.

"Pulp and paper prices are likely to hold up relatively better, although falling U.S. consumption of newsprint will require capacity reductions."

"Agricultural prices are expected to ease during the next year although comparatively low global inventories of key commodities should provide some support."

Jan. 20 (Bloomberg) - Microsoft Corp.’s support for gay- rights legislation in Washington State has local evangelical Christian ministers readying a counterattack. One possible weapon, they say: boycotting the software maker’s stock.

"This isn’t something we intend to just let slide," says Joseph Fuiten, a pastor in Bothell, Washington, who leads Positive Christian Agenda, an umbrella organization for 35 religious groups. "In the view of a lot of evangelicals, they have overstepped their bounds. It’s muscle time."

Microsoft, Nike Inc., Boeing Co. and other companies urged state legislators to pass the gay-rights measure in a joint letter last week. The legislation would add "sexual orientation" to a state law that already bans discrimination in housing, employment and insurance based on race, national origin, gender, marital status or age.

Sixteen U.S. states have similar protections, including California, New York and Illinois, according to Equal Rights Washington, a Seattle-based group that supports the measure.

Ken Hutcherson, pastor of Antioch Bible Church in Redmond, Washington, where Microsoft is based, is coordinating the opposition, according to Fuiten. He will likely urge church members nationwide to divest shares in Microsoft and other companies that support the legislation, Fuiten says.

"There are about 63 million evangelicals in America, and so we work in a lot of mutual funds and investment portfolios," says Fuiten, 56. "If you could make Microsoft’s stock drop by $1 a share, you cost Bill Gates $200 million."

Gates, who is Microsoft’s chairman, holds shares worth about $26 billion. Microsoft shares fell 61 cents, or 2.3 percent, to $26.41 as of 4 p.m. today in Nasdaq Stock Market trading. The Dow Jones Industrial Average dropped 2 percent.

Hutcherson had said he would officially call for an unspecified boycott of Microsoft during a radio program yesterday, according to a Jan. 17 Associated Press report. No such call took place on the program.

Hutcherson didn’t return calls seeking comment. "There is something in the works, but I can’t say what it is," Anne Comer, a spokeswoman for the minister, said late yesterday.

Microsoft spokesman Lou Gellos declined to comment on the possible boycott. "We stick by our points made in the letter with the other companies and support the efforts to pass this significant anti-discrimination legislation," he said.

Supporters say the proposal has a good chance of passing in the state Senate after one senator reversed his opposition this month. The bill lost by one vote in the upper chamber last year after the House passed it, 61-37.

"We need Christians to stand up, we need moralists to stand up," Hutcherson said yesterday on the radio show, a national Christian talk-radio program called "Focus on the Family" that runs on 6,000 stations. "If this bill passes on sexual orientation, the next step will be same-sex marriage."

The legislation has been under consideration for more than a decade. Microsoft last year changed its stance on the measure to neutral, prompting Hutcherson to say he pressured the company into dropping its support. Microsoft later said it would support the proposal in future years.

In addition to Microsoft, it was signed by Beaverton, Oregon-based Nike; Boeing, which is based in Chicago and makes commercial airplanes in Washington; Palo Alto, California-based Hewlett-Packard Co., a computer maker that has workers in the state; Seattle-based Corbis Corp., a closely held photo archive and licensing company founded by Gates; Seattle-based RealNetworks Inc., owner of the Rhapsody online music service; and Seattle-based Vulcan Inc., the investment arm of Microsoft co-founder Paul Allen.

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