Industry Canada has approved Xstrata‘s (XSRAF-O, XTA-L) hostile bid for Falconbridge (FAL-T, FAL-N), removing the last major regulatory hurdle before the Swiss miner’s offer.
Xstrata is offering Falconbridge shareholders $62.50 in cash. The bid expires on Aug. 14 — the same day the scheme will be put to a vote by Xstrata’s shareholders. Xstrata has already locked up the support of Credit Suisse Securities and Glencore International, who together hold around 35.9% of the company’s outstanding shares.
In obtaining approval, Xstrata confirmed that Falconbridge’s Canadian zinc and copper operations would be managed from Toronto, and the city would also be home to Xstrata Nickel — the company’s new stand-alone nickel business. Xstrata also pledged a three-year moratorium on layoffs among operating staff at any of Falco’s operations in Canada.
The company also intends to establish a technology marketing division in Toronto and research and development unit in Sudbury. Plans also call for substantial spending on research and exploration in Canada over the next three years.
Investors have pegged Xstrata as the winner in the battle for Falconbridge, with Falco’s shares generally trading at or near Xstrata’s offer price of late. Inco’s “best and final” bid of $18.50 in cash plus 0.55676 of a share valued Falco’s shares at $64.54, based on Inco’s shares price in late-afternoon trading in Toronto on July 25.
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