Updated from 8:16 a.m. EDT
( PD) has terminated its merger plan with Canadian miner
, indicating it was driven away by a competing offer from Brazil's
Companhia Vale Do Rio Doce
As a result, Inco has paid Phelps Dodge $125 million and agreed to pay an additional $350 million if it signs another agreement by Sept. 7 to be acquired. Last week, Inco rejected CVRD's unsolicited proposal and reiterated its support for a cash-and-stock merger with Arizona-based Phelps Dodge.
Steven Whisler, chairman and chief executive of Phelps Dodge, said when his company entered a deal to merge with both Inco and
in a three-way deal, "we saw a unique opportunity to create the preeminent North American-based miner with leading positions in copper and nickel and one having enormous synergies. We knew it would be a challenging undertaking to succeed against the various hostile bids for Falconbridge and Inco."
Falconbridge has since agreed to be acquired by
"Inco, with its world-class assets, also would have been an attractive transaction for our shareholders at the price we agreed," Whisler said. "However, the synergies available in a two-way combination with Inco were much smaller than those available in the three-way combination. After CVRD made its all-cash, $86-per-share offer, we elected not to participate further."