Incos offer for Falconbridge fails
Canadian nickel miner Inco Ltd. said Friday its $17.3 billion bid for rival Falconbridge Ltd. has failed and the company is “moving on,” marking an apparent victory for Anglo-Swiss mining company Xstrata PLC in its hostile attempt to take over Falconbridge.
Inco said not enough Falconbridge shares were tendered by midnight Thursday, and it has instructed depositary CIBC Mellon Trust Co. to return all shares that were tendered. The company didn’t say how many shares were tendered, but the minimum tender condition for its stock-and-cash bid was 50.01 percent.
“Though a large number of Falconbridge shareholders supported our offer, unfortunately it wasn’t enough,” said Scott Hand, chairman and CEO of Inco. “This is disappointing news for the many people at Inco and Falconbridge who have worked very hard to realize this transaction and create what we believe would have been a truly great mining company. But the Falconbridge shareholders have spoken, and we’re moving on.”
On Thursday, Xstrata, which already owns about 20 percent of Falconbridge, said it planned to buy up to another 5 percent of the company’s shares. Last week, Xstrata raised its hostile bid to acquire the remaining 80 percent of Falconbridge to $16.9 billion in cash.
Xstrata welcomed Inco’s announcement that it was dropping out of the bidding war.
“The success of Xstrata’s offer is the best outcome for Falconbridge stakeholders, including, in particular, shareholders and employees,” the company said in a statement.
Inco said it is now turning its attention to completing its takeover by Phoenix-based copper miner Phelps Dodge Inc. to create “a global powerhouse in nickel and copper.”
The company said the offer from Phelps is “clearly superior to the competing bid for Inco put forward by Teck Cominco.” Vancouver-based Teck Comino Ltd. has also launched a hostile takeover attempt for Inco.
Phelps Dodge Inco would be the world’s second-largest nickel producer, one of the world’s largest copper producers, and a leading producer of molybdenum and cobalt.
Under terms of Inco’s agreement with Falconbridge, Inco will receive $150 million as a result of the failure to meet the minimum tender condition. Inco will receive a further break-up fee of $300 million in the event that Xstrata succeeds in acquiring Falconbridge.
Inco had also agreed to sell the Nikkelverk refinery and other assets to LionOre Mining International Ltd., in the event its bid for Falconbridge was accepted. Because of the failed result, Inco must pay a break-up fee of $32.5 million to LionOre.
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