TAKEOVER BID – Canico supports new CRVD offer

BRAZIL - Brazilian iron ore miner COMPANHIA VALE DO RIO DOCE (CVRD) has raised its offer to acquire Canadian resour...
BRAZIL - Brazilian iron ore miner COMPANHIA VALE DO RIO DOCE (CVRD) has raised its offer to acquire Canadian resource company CANICO RESOURCE to Cdn$20.80 per share from Cdn$17.50, Canico said in a statement. Canico's board has decided the new bid is fair and is recommending that shareholders accept the offer. The board did not recommend that shareholders accept the previous offer.

The Canadian company has 41.7 million shares outstanding, according to the Toronto stock exchange, which multiplied by CVRD's new offer means the total transaction would cost Cdn$867mn.

CVRD has also entered into a lockup agreement with Canico shareholders to acquire 11.5% of the company's outstanding common shares. The iron ore miner will mail a note with the new offer to Canico shareholders by Nov. 17; the offer expires Nov. 28.

The Canadian junior is primarily focused on developing the US$1.1-billion Ona Puma nickel laterite project in Brazil's Par state, which would be CVRD's second nickel project.

CVRD upgraded its offer based on market reactions and to "attract" Canico's board, CVRD CFO Fabio Barbosa said during a conference call. "In order to get Canico's board to support our proposal, we had to move up our bid and now we have their support. We expect to conclude this process shortly, earlier than expected," he added. "The Canico project could bring us a stronger presence in the nickel business."

Barbosa said he does not know how Canadian nickel producer INCO LTD. will react to the new offer, considering Inco would own up to 17.2% of Canico if its bid for base metals miner FALCONBRIDGE is a success.

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