Phelps Dodge Corp. made it official, on 26 June 2006, announcing an agreement to acquire Canadian miners Inco Ltd and Falconbridge Ltd for USD 40 billion. The three-way combination will give rise to a leading global producer of industrial metals to be named Phelps Dodge Inco Corp. Terms call for Phelps Dodge, the Phoenix-based copper giant, to pay premiums of 23% and 19%, respectively, for Inco and Falconbridge based on their 23 June closing prices. The terms also call for Toronto-based Inco to first move ahead with its outstanding offer to acquire Falconbridge, sweetening the consideration to be paid in cash and stock for Falconbridge, whose board approved the revised bid. Inco stockholders then would receive payment from Phelps Dodge of CDN 17.50 a share, plus 0.672 of a share of Phelps Dodge stock for each of their shares, equating to a price of about CDN 80.13 for each Inco share. In particular, the three-way combination’s expected to result in total annual synergies of about USD 900 million by 2008, including USD 550 million in total expected annual synergies from the Inco-Falconbridge transaction.
