At long last the deal is done: COMPANHIA VALE DO RIO DOCE (CVRD) now owns Canadian mining icon, INCO LIMITED. It has taken over 18 months on the merger-go-round, but the wild ride is finally coming to an end for nickel investors.
CVRD announced on Tuesday, Oct. 24, that it has bought 75.66% of the issued and outstanding Inco common shares on a fully diluted basis. The Brazilian mining powerhouse then extended its offer of Cdn$86/share (all cash) to midnight Nov. 3, 2006. CVRD’s next moves will be to reconstitute the Inco board and apply to delist Inco shares from the New York and Toronto stock exchanges. That will pave the way for Inco to cease to be a reporting issuer in the United States or Canada.
The reality is that one of Canada’s most-recognizable mining names is now a Brazilian company. I’m going to have to remind myself more than once that the Sudbury Basin is now in the hands of foreign corporations.
At least CVRD is making the right noises about being a responsible steward of resources, both mineral and human. It has taken full-page colour newspaper ads across the country to proclaim that “Together we are better”. The theme is repeated on its website www.CVRD.com/br along with copious information about the merger. There is a link at www.Inco.com to the same information. Only time will tell what that means for the men and women who call Sudbury home.
Inco will contribute its record third quarter earnings toward making a “better” enterprise. It reported quarterly net earnings of US$701 million, compared with US$64 million in the same period a year earlier. It seems Inco is breaking records with each quarter this year. For the first nine months of 2006, net earnings reached US$1.38 billion (on sales of US$5.3 billion), more than doubling the US$601 million it earned during the first three quarters of 2005. Everyone loves US$15/lb nickel.
Let’s give CVRD the benefit of the doubt and assume it will be a welcome corporate neighbour in Canada. We wish it and its Canadian employees continued success.