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A Nickel Empire Is Born

Inco agreed to buy Falconbridge in an $11 billion deal.
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struck a pact to buy



in an $11 billion deal, combining the two Canadian mining companies into one nickel and copper goliath.

Inco is offering C$34 in cash (about $29), or 0.6713 of a common share plus 5 Canadian cents in cash, for each Falconbridge share.

The combination will create the world's largest nickel producer, with combined estimated 2005 output of 735 million pounds. Nickel output could be expected to reach about 1 billion pounds in 2009. Combined copper production this year would be 1.33 billion pounds, climbing to roughly 2.4 billion pounds in 2009.

Additionally, the combined company would have had pro forma revenue of $6.4 billion for the six months ended June 30.

Inco said the board Falconbridge has determined that the offer is fair from a financial point of view and will recommend that its shareholders accept the bid.

Shares of Inco were gaining $1.52, or 3.6%, to $44.35, and Falconbridge was jumping $3.13, or 12%, to $29.54.