Facing a possible creeping takeover by Swiss-based miner
The move comes just weeks after Xstrata agreed to buy some 370,000 additional Falconbridge shares from a non-Canadian investor to boost its stake to 20.01%. The mining giant originally acquired a 19.9% stake in Falconbridge from asset-management company
At the time, Xstrata CEO Mick Davis said his company did not intend to remain as a long-term shareholder with a minority interest.
Under Falco’s plan, rights holders would be able to buy Falco shares at half the going rate during any acquisition of (or announced plan to buy) more than 20% of Falco’s shares other than by an offer to all shareholders, or with the board approval.
For a bid to be permitted under the plan it must remain open for at least 60 days, and must have at least 50% of the company’s shares tendered to it. In that latter event, the offer must be extended for 10 days to allow for other shareholders to tender.
Falconbridge says that Xstrata’s existing 20.01% stake in the company will be grandfathered under the plan, but that the company cannot raise its stake except under certain circumstances.
“Some of our shareholders have voiced concerns with the possibility of a creeping takeover,” said Falco CEO Derek Pannell in a statement. “If the actions of a bidder resulted in the acquisition of Falconbridge, we would want to make sure shareholders are treated fairly.”
Falconbridge shareholders must now approve their board’s plan within six months.
Falconbridge has also retained CIBC World Markets and McCarthy Tetrault as advisers to evaluate and review “all value-creation opportunities.”
Privately owned Swiss commodity trader
Shares in Falconbridge were 95, or 3.3%, higher at $29.70 in late-afternoon trading in Toronto on Sept. 23.
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