TORONTO — Falconbridge's board of directors recommended Tuesday that shareholders tender to Xstrata's offer, signalling an end to a months-long takeover battle among Canada's mining giants.
Swiss-based Xstrata, which already owns a 24.5 per cent stake of Falconbridge, is offering $63.25 a share in cash, including a special dividend, for the rest. That offer expires Aug. 14 at 8 p.m. ET.
Falconbridge had initially spurned Xstrata's offer, forming an alliance with fellow Canadian mining company Inco and U.S. copper miner Phelps Dodge Corp. with plans to create the country's biggest nickel company. Those plans dissolved after shareholders failed to support the merger.
On Tuesday, Falconbridge's board said that after examining alternatives for the company, it was satisfied that a more attractive offer is unlikely to emerge.
"Xstrata currently owns 24.5 per cent of Falconbridge and since its offer is for any or all shares of Falconbridge, it appears likely that it will attract sufficient shares to gain effective control of Falconbridge on Aug. 14," Falconbridge chief executive Derek Pannell said in a release.
"I believe Xstrata is a well-run company that values both the physical assets and the human expertise within Falconbridge," he added.
"The commitments Xstrata announced on July 25 relating to locating Xstrata Nickel as well as copper and zinc offices in Toronto, job protection, research and development and continued investment in Canada are reassuring to Falconbridge employees."
The board of directors for Inco, which was also the subject of a hostile bid by Vancouver-based Teck Cominco, said Monday it's open to negotiations with Teck that might boost its offer above that of Phelps Dodge.
Teck Cominco, which received an olive branch after months of being snubbed by Inco, said emphatically Tuesday that it is not in talks with Inco and has no plans to enter discussions or negotiations on a new and higher bid to its $17.5-billion offer.
Teck's bid was conditional upon Inco dropping the Falconbridge tie-up.
Phelps Dodge has a separate friendly deal to merge with Inco — with or without Falconbridge — but many analysts say it has a poor chance of success because of shareholder opposition from shareholders of both companies.
Prior to the release, Falconbridge shares fell a penny to $62.23 on the Toronto Stock Exchange.
