TORONTO - Fighting hostile takeover bids, INCO LIMITED and FALCONBRIDGE LIMITED are trying to promote their merger to investors by pointing out $550 million in annual savings that could be had at their mines and plants near Sudbury, Ontario. That is $200 million more than the $350 million mentioned when the deal was originally announced in October 2005.
The two companies invited the investment community on a two-day "Synergy Summit" at their facilities near Sudbury this week. The idea is to gain support for the Inco-Falconbridge deal rather than TECK COMINCO's competing bid for Inco, or XSTRATA's unwelcome bid for the 80% of Falconbridge it does not already own. Which offer shareholders will eventually accept is unclear.
Of the estimated $550 million in synergy value that has been identified so far, approximately $205 million is expected to come from optimizing material feeds and processing facilities, $135 million from maximizing production by accelerating mine development, $100 million from cost and other improvements, and $110 million from savings in general and administrative costs, say Inco and Falconbridge.
Inco's offer for Falconbridge is explained at www.Inco.com/NewInco.
Separately, Xstrata says the U.S. Department of Justice has raised no competition issues with Xstrata's bid for Falconbridge. The conclusion of the Inco-Falconbridge deal has been delayed by anti-trust reviews in the U.S. and Europe. To allay fears, Falconbridge announced on June 7 the intention to sell its Norwegian nickel refinery to Toronto-based LIONORE MINING INTERNATIONAL.