Canadian mining company Teck Cominco Ltd. said Monday it would offer $17.8 billion Canadian dollars ($16.08 billion) in cash and stock to acquire Inco Ltd., a leading nickel producer based in Canada, provided that Inco ends its proposed acquisition of Falconbridge Ltd.
The newly combined company will create the world's biggest zinc miner and No. 2 nickel miner, Teck Cominco said, with market-leading positions in metallurgical coal and a major presence in copper, gold and other commodities. It will also add to Teck Cominco's earnings and cash flow per share, the company said.
Under the terms of the offer, Inco shareholders will have the right to receive C$78.50 ($70.91) in cash or 0.9776 of a Teck Cominco Class B subordinate voting share plus 5 Canadian cents for each Inco share, subject to pro ration.
Teck Cominco said the offer represents a premium of 27.8 percent and 20.1 percent over the 30-day volume weighted average price and closing price, respectively, of Inco common stock on the Toronto Stock Exchange as of May 5.
Inco's shares closed at $65.38 on the Toronto Stock Exchange on Friday. Its U.S.-listed shares climbed $11.87, or 20.1 percent, to $70.95 in premarket activity.
Teck Cominco said its offer was conditioned upon Inco withdrawing or ending its acquisition of Falconbridge, which Inco proposed buying in a friendly takeover in October 2005.
The company argued that Inco shareholders would receive a significant premium for their shares under its proposed offer, instead of paying a premium to acquire Falconbridge.
Under terms of the proposed Falconbridge offer, Inco said it would offer $34 Canadian dollars, or 0.6713 of Inco common share plus 5 Canadian cents for each Falconbridge common share. The proposed acquisition received approval from Canadian antitrust regulators in January, and was being reviewed by U.S. and European antitrust regulators as of February.
Teck Cominco said it plans to mail Inco shareholders the proposed takeover documents as soon as possible, adding the offer will be open for acceptance for at least 60 days after the date of the mailing.