Mining Rivals Increase Bids in 4-Party Fight

Four years after the leaders of the world’s eight largest economies vowed to raise $20 billion over 10 years to prevent terrorists from obtaining nuclear materials, only $3.5 billion has been donated — and far less has been used to secure enriched uranium, the key ingredient of a nuclear weapon.

Phelps Dodge, the Phoenix-based mining company, sweetened its offer for the rivals Inco and Falconbridge by 2.75 Canadian dollars a share yesterday. The new offer is an effort to thwart a recently increased hostile bid for the nickel-mining company Falconbridge by the mining conglomerate Xstrata of Zug, Switzerland.

In turn, Inco raised its bid for Falconbridge by one Canadian a dollar a share yesterday and, in an attempt to dissuade shareholders from accepting Xstrata’s offer, Falconbridge’s board announced that it would pay a special dividend of 75 cents a share to anyone holding its stock on July 26, five days after Xstrata’s offer is to expire.

Phelps Dodge, which originally announced a complex $40 billion friendly merger arrangement with Inco and Falconbridge last month, has been under pressure to raise its offer. Before Phelps Dodge’s offer, Inco and Falconbridge had already planned to merge themselves, but that transaction was in question because Xstrata had made a rival offer for Falconbridge.

Xstrata, a diversified mining company that already owns 20 percent of Falconbridge, is offering 59 Canadian dollars ($52.27) a share in cash. Inco’s cash-and-stock offer will now be worth 60.19 Canadian dollars, based on its closing price in Friday’s trading.

Phelps Dodge had to increase its offer or risk losing the deal. Inco said on Thursday that ”while a growing number of acceptances were received over the course of the last week,’’ it did not appear that it would receive the two-thirds of Falconbridge’s shares its bid required.

A shareholder protection plan at Falconbridge expires on July 28. When that happens, Xstrata will be able to increase its Falconbridge stake by buying small lots of stock. That effectively gave Inco until today to increase its bid again while giving shareholders the required 10 days to review the offer.

Source: www.nytimes.com