Zug, Switzerland-based, diversified base metal miner Xstrata (XTA-L) has agreed to buy some 370,000 additional shares of Falconbridge (FL-T) from a non-Canadian investor.
The proposed off-market acquisition would push Xstrata’s stake in Falco to around 73.5 million shares, or 20.01%. As such, the deal is subject to approval by regulators in Canada.
Xstrata says the acquisition would not oblige it to make any offer to Falconbridge’s other shareholders.
In Ontario, acquirers are usually required to make a formal takeover bid once their stake exceeds 20%. Exemptions from the rule include private agreement purchases at not more than a 15% premium over market prices, and share acquisitions made outside of Canada.
Earlier this month, Xstrata acquired a 19.9% stake in Falconbridge from asset-management company Brascan (BNN-T) for around $2 billion.
At the time, Xstrata CEO Mick Davis said the acquisition was designed to secure "one of the most significant options available in the mining industry.” The move raised expectations among many market watchers that Xstrata would eventually launch an outright takeover bid.
While Davis would not confirm whether that was the plan, he did say that Xstrata did not intend to remain as a long-term shareholder with a minority interest.
Privately owned Swiss commodity trader Glencore International owns 40% of Xstrata.
Shares in Falconbridge were 56, or 2.1%, higher at $27.56 in afternoon trading in Toronto following the news on Aug. 31. Xstrata shares ended slightly higher at 1,301 pence in London.
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