Phelps Dodge Responds to Xstrata's Increased Bid for Falconbridge

Strategic Insights -

Phelps Dodge Corp. (PD), a US-based mining company, has expressed its stance on Xstrata PLC's raised offer for Falconbridge Ltd. (FAL), a Canadian nickel miner. In a surprise move, Xstrata lifted its bid to $16.2 billion in cash, or C$18.1 billion, to acquire the remaining shares of Falconbridge it doesn't already own. This development throws a wrench into Phelps Dodge's plan to buy both Falconbridge and Inco Ltd. (N). Phelps Dodge believes the friendly three-way deal between the three companies will provide the greatest long-term value for Falconbridge shareholders and net benefits to Canada, which would not be available under Xstrata's hostile offer.

Key Takeaways:

  • Phelps Dodge was not surprised by Xstrata's increased bid, citing the attractiveness of Falconbridge's assets.
  • Xstrata's offer of $16.2 billion in cash, or C$18.1 billion, for the remaining shares of Falconbridge puts pressure on Phelps Dodge's plan to buy both Falconbridge and Inco Ltd. (N).
  • The three-way agreed deal between Phelps Dodge, Inco, and Falconbridge may provide the greatest long-term value for Falconbridge shareholders and net benefits to Canada.
  • Xstrata's hostile offer may not be as beneficial as the friendly three-way deal for Falconbridge shareholders.
  • The struggle for control of Falconbridge continues, with Xstrata's increased bid putting pressure on Phelps Dodge's plan.

Statistics:

  • The increased bid of $16.2 billion in cash, or C$18.1 billion, is a significant development in the takeover battle for Falconbridge.
  • The three-way agreed deal between Phelps Dodge, Inco, and Falconbridge is estimated to provide greater long-term value for Falconbridge shareholders.

Sources:

  • Dow Jones Commodities News via Comtex
  • Dol Jones News
  • Comtex SmarTrend(SM) Alert
  • Comtex News Network, Inc.