Steel is not only attracting the covetous

Steel is not only attracting the covetous. While the situation on the Arcelor folder is is released this weekend for Mittal Steel, the stock market battle that animates the nickel sector appears, also, close to its denouement, with the entry in the running of the White Knight. American Phelps Dodge yesterday announced a friendly merger with Inco project, which, on its side and this marriage three, slightly pointed its offer on compatriot Falconbridge. An operation of 40 billion U.S. dollars that caps the post Swiss Xstrata and its offer for Falconbridge, but also another Canadian, Teck Cominco, which announced early may bid on Inco.

This approximation to three must give birth to one of the world leaders in the nickel and copper. The new set, called the Phelps Dodge Inco, would have its headquarters in Phoenix in Arizona, current seat of Phelps Dodge. The copper division would also housed. But the new Inco Nickel division would be headed for Toronto, where the seats of the two Canadian groups are established.

A 23 premium

For the first quarter of 2006, the combination of the three mineral groups displays a global turnover of US $ 6.3 billion and a crude 1.9 billion operating surplus. It should retain a double rating in the New York Stock Exchange and the Toronto Stock Exchange. In addition, a share buyback program is announced at the end of the operation of reconciliation, for an amount of $ 5 billion.

Phelps Dodge proposes to acquire Inco in both cash and shares. Closing last Friday, the offer values Inco 80,13 Canadian dollars per share. For each action Inco, Canadian Group shareholders will receive 0,672 action Phelps Dodge more 17.50 $ in cash. In its press release, Phelps Dodge said its offer represents a premium of 23 over the market price of Friday night and a 19 premium on the valorization of the offer unsolicited Teck Cominco. He adds that its offer is not conditioned on the success of that of Inco on Falconbridge.

Outcome in September

Alongside the entry finalists for Phelps Dodge Inco 5.2 adjusted its friendly offer for Falconbridge. For every action of his fellow countryman, it now offers 17.50 $ and 0,55.676 action Inco instead of $ 12.50 and 0,524 action. On the basis of the valuation of the Inco action offered by Phelps Dodge, this new offer values the Falconbridge action to 62,11 Canadian dollars and represents a 12 premium on the closing price of Falconbridge Friday and 18 on the valorization of the unfriendly offer of Xstrata Switzerland on the Canadian group.

Would at the end of the operation which should lead in September 2006, the current shareholders of Phelps Dodge hold 40 of the new set, those of Inco 31 and those of Falconbridge 29.

The new set displays a goal of 900 million dollars in synergies annually by 2008, including 550 million of synergies related to the reconciliation between Inco and Falconbridge.

At the meeting, action Inco was 13.8, to 74,28 Canadian dollars on the Toronto Stock Exchange, while Falconbridge was 5.86, to $ 58.75. New York, Phelps Dodge dropped 7.03, to 77,12 dollars.