Phelps Dodge Corp on Monday said it would acquire Canada's Inco Ltd and Falconbridge Ltd for about $40 billion in a blockbuster deal to create the world's largest nickel miner and second-largest copper producer.
Phelps Dodge said it would buy Inco for C$80.13 per share in cash and stock. Inco, which already agreed to buy Falconbridge, in turn raised its existing offer for Falconbridge to an implied value of C$62.11 per share. Phelps Dodge presented the terms in Canadian currency and the deal value in US dollars.
But both Inco and Falconbridge already faced unsolicited bidders - Inco from Teck Cominco Ltd and Falconbridge from Xstrata Plc. - and at least in Xstrata's case, a source familiar with their situation said Xstrata had no intention of abandoning its bid despite the Phelps Dodge deal.
The companies forecast combined annual cost savings of $900 million by 2008. The deal would also add to earnings from 2008 onward, while adding to cash flow immediately. The combined Phelps Dodge Inco Corp would be based in Phoenix, where Phelps Dodge has its headquarters, with the new Inco Nickel division run out of Toronto. The sides said they did not expect any antitrust issues.
Phelps Dodge Chief Executive J. Steven Whisler would be chairman and CEO and Inco CEO Scott Hand would be vice chairman. Falconbridge CEO Derek Pannell would be president of Inco Nickel and head all nickel, aluminium and zinc operations.
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