Inco's Revised Bid for Falconbridge: Key Takeaways and Statistics

Strategic Insights -

Inco's chairman and CEO, Scott Hand, made remarks on the revised bid for Falconbridge Limited, emphasizing the benefits of Inco's offer over Xstrata's bid. Hand highlighted the value creation, regulated approvals, and synergies of Inco's proposal, which would form the world's largest nickel producer and a leading super-major in the global mining industry. The revised bid from Inco's and Phelps Dodge's friendly three-way agreement offers a premium of 4.5% above Xstrata's offer, with an implied value of C$61.65 per share.

Key Takeaways:

  • Inco's revised bid provides a premium of 4.5% above Xstrata's offer, with an implied value of C$61.65 per share, based on today's mid-day share price for Phelps Dodge.
  • Inco's offer is subject to regulatory clearances, whereas Xstrata's bid is contingent on receipt of necessary approvals.
  • The combination of Inco and Falconbridge with Phelps Dodge would create the world's number one producer of nickel and the second largest producer of copper, with a net present value of $5.8 billion from synergies.
  • Inco's offer allows for the capture of outstanding synergies available in the Sudbury Basin, with an estimated annual value of $900 million, and a net present value of $5.8 billion.
  • Inco encourages Falconbridge shareholders to tender their shares to the Inco offer, citing the potential for new opportunities for investment, growth, and employment in the Sudbury Basin.

Statistics:

  • C$61.65: the implied value of Inco's revised bid for Falconbridge Limited per share.
  • 4.5%: the premium above Xstrata's offer provided by Inco's revised bid.
  • $5.8 billion: the net present value of synergies in the Inco-Pelphs Dodge combination.
  • $900 million: the estimated annual value of synergies available in the Sudbury Basin.
  • 3-way agreement: the friendly agreement between Inco, Falconbridge, and Phelps Dodge, which forms the basis for Inco's revised bid.

Sources:

  • "The following comments were made today by Inco Chairman and CEO Scott Hand in response to the revised bid from Xstrata plc for Falconbridge Limited announced earlier today:" (Press release, July 11)
  • Inco's registration statement on Form F-8, filed with the U.S. Securities and Exchange Commission (SEC), on October 24, 2005.
  • Cautionary statement regarding forward-looking statements (press release, July 11)
  • MacKenzie Partners Inc. (toll-free numbers)
  • Inco's media or investor relations departments
  • http://www.inco.com/