Falconbridge, Inco, Phelps Dodge laud deal
The CEOs of Inco Ltd., Phelps Dodge Corp. and takeover target Falconbridge Ltd. stood staunchly behind what they called a winning deal yesterday, despite observers’ view the new bid does not guarantee victory in the heated mining battle.
“In my mind, it clearly is a knockout bid,” Falconbridge CEO Derek Pannell said in an interview.
Falconbridge’s board has recommended its shareholders accept the new bid, which Inco raised by $1 a share Sunday. It also declared Sunday a special cash dividend of 75 cents a share, which sweetens the deal by an additional $240 million US.
The new bid, which expires July 27 and has reduced the total minimum proportion of Falconbridge stock required to 50.01%, from 66.6%, is supported by Phelps Dodge Corp.
The U.S. copper giant made a $40-billion US deal for the two Canadian miners last month after they struggled to complete their own merger amid competing offers.
Switzerland’s Xstrata PLC is vying for the 80% of Falconbridge it doesn’t already own and last week it raised its all-cash offer to $59 a share.
Meanwhile, Vancouver-based miner Teck Cominco Ltd. has made a hostile bid for Inco, and last week said it plans to argue to have Inco’s shareholder-rights plan removed at a hearing scheduled on Friday.
On Sunday, Phelps Dodge also sweetened the cash portion of its offer for Inco by $2.75 to $20.25 per share.
“We, frankly, are even more confident about our views on synergies, about our understanding of the operating plans for Inco and Falconbridge, and for our strategy to drive superior financial performance, than we were when we announced this transaction,” Phelps CEO Steven Whisler said yesterday.
“This is a hell of a good offer,” added Inco CEO Scott Hand.
Industry analysts said they’re less certain of how much punch the new offer carries, however, and didn’t believe the battle was over.
The new Inco proposal “is clearly a superior bid to the current Xstrata bid, but I don’t think it’s sufficient to deter Xstrata,” said Blackmont Capital analyst Larry Smith.
