Inco ( N) said its attempt to acquire rival Canadian miner Falconbridge ( FAL) failed, but the company pledged to pursue its planned tie-up with Phoenix miner Phelps Dodge ( PD). Inco said its tender offer for Falconbridge shares expired at midnight without the requisite 50.1% of shares having been tendered. Falconbridge had earlier
recommended the Inco offer to shareholders even as analysts were saying investors would probably prefer the unsolicited all-cash bid being proffered by rival Xstrata. "Though a large number of Falconbridge shareholders supported our offer, unfortunately it wasn't enough," said Scott Hand, Chairman and Chief Executive Officer of Inco. "This is disappointing news for the many people at Inco and Falconbridge who have worked very hard to realize this transaction and create what we believe would have been a truly great mining company. I thank everyone for the many long hours and effort they have contributed. But the Falconbridge shareholders have spoken, and we're moving on. I wish Derek Pannell and his team all the best going forward." The Inco setback comes just a day after Xstrata, which already holds 20% of Falconbridge, pledged to boost its stake by 5% in open market transactions. Xstrata has said it would buy all Falconbridge shares for 62.50 Canadian dollars in cash, or about $54.83 U.S., at an Aug. 14 shareholder meeting. It pledged to start buying the shares Friday, when Falconbridge's shareholder rights plan expires, Reuters reported. On Monday, Falconbridge's board voted unanimously to reject the bid by Xstrata. Inco was to have acquired shares of Falconbridge for $16.22 cash plus 0.5575 shares of Inco, valuing Falconbridge at $56.49 a share. In addition, Phelps Dodge would acquire all shares of Inco in exchange for 0.67 shares of Phelps Dodge plus $17.76 cash per share, at an implied value of $69.14 a share based on closing prices.