Vancouver- In the latest mining merger, Noranda (NRD-T) and Falconbridge (FL-T) are planning to combine forces to form a heavyweight in the North American base metals sector to be renamed NorandaFalconbridge.
Noranda will effectively be acquiring the 40% of Falconbridge’s shares it doesn’t already own.
The boards of the two companies unanimously agreed to proceed with their merger through a share exchange.The companies believe that the merged company will have more growth potential and will be able to attract more institutional investors owing to a simplified corporate structure.
Noranda is offering 1.77 of its shares for each Falconbridge share held a premium of 15% from Falconbridge’s share price over the last 20-day period.
The merger is subject to a majority of Falconbridge’s minority shareholders tendering to the offer.
The merger is also subject to completion of Noranda’s US$1.25 billion issuer bid to repurchase some 63.4 million of its common shares in exchange for three series of junior preferred shares.Brascan which owns 41% of Noranda’s common shares, has agreed to tender its shares to the issuer bid which is expected at the end of April. This will leave it with a 16 to 26% interest in the new company.
Both companies produce nickel and copper, while Falconbridge also produces cobalt and platinum group metals and is a force in the global metals recycling business, whereas Noranda also produces zinc and aluminum.
Meanwhile, Chinese-state owned MinMetals has reportedly given up on its plan to purchase Noranda as first announced in November.
Shares in Falconbridge closed up over 3% at $40.40 on volume of over 10 million while Noranda’s shares were off by 1.3% to $23 on over 26 million shares.
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