If Phelps Dodge Corp. tables a richer takeover bid for Inco Ltd. as expected in the next few days, Don Lindsay will finally have to show all his cards in the bidding for one of Canada's mining titans.
Ever since the veteran Toronto investment banker was parachuted in as head of Vancouver-based Teck Cominco Ltd. last year, Mr. Lindsay has kept competitors and investors guessing by pursuing a takeover game plan that has had more twists than a mining drill rig.
Last April, he told Teck's board that Canada's mining companies were poised for a round of takeovers that he compared with the recent Australian merger frenzy, which created two of the world's biggest miners, BHP Billiton and Rio Tinto. If Teck wanted to emerge as a dominant force in mining, Mr. Lindsay advised the board, it had a once-in-a-generation opportunity to acquire some of the country's premier mining assets.
“Everything that you've seen unfold was all put together in that presentation,” he said in an interview this week. To be sure, Mr. Lindsay accurately predicted that heavyweights such as Placer Dome Inc., Falconbridge Ltd. and now Inco would be acquired.
He also correctly warned that Inco's long odyssey to acquire Falconbridge would be trumped by Swiss-based Xstrata PLC.
What has been far less predictable, however, are Teck's ambitions. Since last summer he has pursued and abandoned a convoluted array of confidential and public takeover bids or overtures that culminated this week with an enriched $18.6-billion hostile bid for Inco.
“It's confusing for the outsider,” Mr. Lindsay said, “but it doesn't mean that Teck has changed the plans it has had in place since last year.”
While Bay Street players credit Mr. Lindsay with cleverly positioning Teck as a leading buyer in the mining merger tumult, industry executives caution that the former CIBC World Markets investment banker's ability to cinch an Inco takeover won't be seriously tested until it faces a richer offer from Phelps — or even other potential acquirers.
If Phelps calls Teck's bluff, Mr. Lindsay must choose between retreat or advancing the stakes in a bidding war that he concedes he “didn't think would go this high.”
As the bidding for Inco heads for the final round, Mr. Lindsay is still sending mixed signals about his plans. Hours after he unveiled Teck's enhanced Inco offer Monday, he warned that if the bidding became excessive, Teck would pull its bid and consider spending billions on buying back its own stock instead. Reflecting on the panic such a move would trigger among short-term arbitrage investors who are betting on higher bids, Mr. Lindsay grinned and said “it would really be something to see.”
Then, minutes after he discussed a possible buyback, Mr. Lindsay switched gears and said Teck could raise more money for a sweetened Inco proposal by selling Teck's gold mining assets and teaming up with other companies, including Falconbridge's soon-to-be parent Xstrata.
The confused message is one of many that mining executives and investors have seen from Teck in the past year.
Last summer, Mr. Lindsay expressed interest in buying a 20-per-cent stake in Falconbridge Ltd., but according to people familiar with the confidential discussions, he backed away after it was vetoed by chairman Norman Keevil, whose family controls the company.
Last fall Teck and Xstrata PLC discussed joint mining acquisitions in Canada, but sources said the confidential plan was rejected by Teck's board. In May, Teck challenged Inco's proposed merger with Falconbridge by launching a hostile bid for Inco. Two days later, Mr. Lindsay privately pushed for a three-way merger with Falconbridge and Inco, but the talks were abandoned.
While the multilevel plays have exhausted many of the seasoned mining executives at Inco and Falconbridge, Mr. Lindsay appears to be thriving on the pace. This week he met with Inco investors in Toronto and New York to pitch Teck's latest bid, and next week he is flying to Australia to speak at a conference about mining trends.
After 20 years as an investment banker to mining companies, he said, “I've been kind of training myself all of my life for this.”
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