While no clear-cut evidence has surfaced that the deal is in trouble, reasons for skepticism abound. From the outset, certain large shareholders reacted negatively to Phelps Dodge' cross-border mega-merger. The copper giant's management got a rude reception last week in New York during a meeting with a group of institutional investors.

People who attended the meeting say a top portfolio manager with Lehman Brothers' ( LEH) Neuberger Berman asset management group loudly denounced the three-way merger, calling it a bad move for Phelps Dodge shareholders. S. Basu Mullick, the manager of Neuberger's $2.1 billion Partners Fund, argued the deal would add too much debt to Phelps Dodge's balance sheet and be dilutive to future earnings, attendees told TheStreet.com. Neuberger Berman is uncomfortable with the amount of debt being used in the acquisition, according to the sources.

Atticus Capital, a hedge fund that owns 9.9% of the company's stock, also questioned the merger last week, saying that the fund was "not convinced on the merits of an acquisition of Inco and Falconbridge." While Atticus hasn't actively opposed the merger and its next step is still unclear, the firm's wait-and-see attitude has left the investors anxious.

Meanwhile, rumors have swirled that opposition to the transaction is about to become more formidable. Traders have speculated that other activists spy an opportunity to press an austerity program at Phelps Dodge like those designed for Kerr-McGee ( KMG) and Mylan Labs ( MYL) last year by Carl Icahn. Indeed, some of the rumors -- none of them confirmed -- hold that Icahn himself is eying a Phelps Dodge stake.

Other activists are already on the scene. Atticus fits the bill. It made its name this spring pulling strings in the stock exchange merger drama involving NYSE Group ( NYX), Euronext and Deutsche Boerse. Activist Dan Loeb's fund Third Point Capital already owns a $45 million stake in Phelps Dodge.

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