TORONTO - Officials of INCO LTD., the company at the centre of so much takeover news this summer, announced that it has terminated the combination agreement with PHELPS DODGE of Phoenix, Arizona. That leaves the way clear for the takeover of Inco by Brazil's COMPANHIA VALE DO RIO DOCE (CVRD).
Inco is obliged to pay US$125 million to Phelps Dodge and a further US$350 million if Inco completes a change-of-control transaction on or before Sept. 7, 2007. Both Inco and Phelps Dodge have cancelled their special meetings of shareholders scheduled for later this month.
Scott Hand, chairman and CEO of Inco, stated, "It was very clear from the proxies we received that Inco shareholders were not going to support the Phelps Dodge transaction, so the two companies agreed that it was in our respective best interests to move on."
Steven Whisler, chairman and CEO of Phelps Dodge, said, "When we entered into our combination agreement with Inco for the three-way combination with Falconbridge, we saw a unique opportunity to create the pre-eminent North American-based miner with leading positions in copper and nickel and one having enormous synergies. Inco, with its world-class assets, also would have been an attractive transaction for our shareholders at the price we agreed. 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."
CVRD announced earlier this week that it had received clearances from the Canadian Competition Bureau and the U.S. authorities to proceed with the acquisition of all of Inco's shares. The relevant documents may be read at www.SEC.gov or obtained from Kingsdale Shareholder Services in Toronto (416-867-2272 or contactus@KingsdaleShareholder.com.
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