Phelps Dodge ( PD) upped the ante this weekend in its ambitious plan to buy rival miners Inco ( N) and Falconbridge ( FAL). But shares of the Phoenix-based copper giant fell 3% as investors worried that the merger will leave Phelps Dodge with too much debt as the economy faces a possible slowdown. Phelps Dodge is trying to assemble a copper and nickel titan by buying Toronto's Inco, which in turn is buying crosstown rival Falconbridge. The companies said Sunday they would boost the cash payout involved in their merger plans, in a bid to keep pace with a European mining giant trying to grab Falconbridge. That company, Xstrata, boosted its own offer last week. Phelps Dodge said Sunday that Inco shareholders will get an added C$2.75 in cash a share under terms of the latest bid, which all told continues to be valued at around $40 billion in cash and stock. Falconbridge shareholders will get an additional C$1 in cash from Inco and a 75 Canadian-cent dividend from Falconbridge. The increased cash bid comes as Falconbridge faces an unsolicited bid from Anglo-Swiss mining group Xstrata. Xstrata last week raised its bid for Falconbridge by 12%. Under the terms of the latest Phelps Dodge bid, Inco shareholders would receive 0.672 shares of Phelps Dodge stock plus C$20.25 in cash for each share of Inco. The new deal values Inco's stock at C$80.70 per share, the companies said. Inco also increased the cash portion of its offering for Falconbridge to 0.55676 shares of Inco plus C$18.50 in cash. Inco would require owning only 50.01% of outstanding shares of Falconbridge vs. the previous proposal where it would acquire a minimum of two-thirds of all shares. The implied value for Falconbridge would be $63.43, the companies said. "We are creating a great nickel and copper company," said Scott Hand, CEO of Inco, in a conference call Monday. He added that supply will chase demand for some time to come in the nickel and copper markets.