Xstrata raises bid for Canada-based Falconbridge

07/12/06 - newratings.com

LONDON, July 12 (newratings.com) – Mining giant Xstrata Plc (XTA-GBX) Tuesday announced that it had raised its hostile takeover bid for Canada-based Falconbridge (FAL) by 12% to C$59 per share in cash, from its earlier C$52.50 per share.

Xstrata already owns a 20% stake in Falconbridge and its latest offer values the remaining 80% stake at C$18.5 billion. Xstrata’s chief executive Mick Davis said the most attractive point of the company’s revised bid was that it was all cash. Falconbridge has already accepted a C$58.35 per share offer from rival Inco Ltd (N) that is backed by Phelps Dodge Corp (PD), which has offered to acquire both the companies.

Inco has offered to pay C$17.50 per share and issue 0.556 shares for each share held in Falconbridge. According to Bloomberg, the three-way agreement includes the payment of breakup fees, including $925 million to Phelps Dodge by Inco. Phelps Dodge had agreed to pay Inco a $500 million fee under certain circumstances.

Meanwhile, Inco and Phelps Dodge have both maintained that their plan offered a better price for Falconbridge. Inco had also received a takeover offer from another Canadian miner, Teck Cominco.