Canadian Regulator Delays Decision on a Mining Bid

The bids by two companies vying for control of the Canadian nickel mining company Falconbridge have met with differing announcements from regulators.

Xstrata of Switzerland said Tuesday that Investment Canada, a government agency that reviews foreign takeovers, told it on Monday that the examination of the company’s offer, which had already spanned 45 days, would take at least another 30 days.

But Toronto-based Inco said its Falconbridge bid had passed its final regulatory hurdle after a decision issued Tuesday by the European Commission’s competition review branch.

Inco’s effort to acquire Falconbridge was announced last October and subsequently delayed because of the competition review in Europe and a Justice Department antitrust investigation in the United States. Inco announced last month that its plan was effectively cleared by the American government.

Xstrata acquired 20 percent of Falconbridge last year from a Canadian holding company. An agreement related to that deal effectively prevented Xstrata from announcing its bid of 16.1 billion Canadian dollars for the rest of Falconbridge’s shares until May.

Some Canadian politicians have suggested, without offering any evidence, that European officials deliberately delayed their investigation of Inco’s plan to accommodate Xstrata’s timetable. That, in turn, has led to suggestions that Canadian foreign investment and competition bureaucrats are taking their time in reviewing Xstrata’s case.

Industry Canada, the government department responsible for Investment Canada, is prevented by law from discussing individual cases. However, Mitch Davies, the director general of its investment review division, said that about half of all reviews required an extension.

Claire Divver, a London-based spokeswoman for Xstrata, declined to comment.

Debra P. Steger, who teaches trade and commerce law at the University of Ottawa, said the complexity of the Xstrata deal meant that the agency might simply need more time to finish its work. She said, however, that the political sensitivity surrounding the proposed deal might also play a role in the delay.

Last month, Inco increased its offer for Falconbridge after agreeing to another deal in which the combined company would ultimately be acquired by Phoenix-based Phelps Dodge for $40 billion.

Because Inco and Falconbridge are among the largest Canadian-owned corporations, some people are urging the government to reject the three-way plan.

The United Steelworkers union, which represents Inco and Falconbridge employees, is backing the merger between the two Canadian companies but opposes an American takeover.

Some of its position was mirrored in an interview with Peter Munk, chairman of the Canadian mining giant Barrick Gold, published Tuesday by The Globe and Mail of Toronto.

“It’s absolutely against Canada’s interests,” Mr. Munk said about Phelps Dodge’s bid. “There is the legal fraternity, there are the stock exchanges and there is the financial community. All of us have a vested stake in having a major mining presence with a Canadian home office, as opposed to having the whole thing taken to Phoenix.”

Source: www.nytimes.com