Undermined

8 May 2006 By Antony Currie Follow @AntonyMCurrie

Canadian miner Inco will be hard pressed to reject its rival s offer. Its own shares have underperformed since it bid for Falconbridge. That deal s not only been bogged by regulatory worries, it looked like Inco was going to have to pay more. Selling out is preferable.

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On Monday Canadian mining firm Teck Cominco made an unsolicited offer to buy rival Inco for C$17.8bn, or C$78.50 a share. If they accept, Inco shareholders will receive $28 per share in cash, and 0.6293 of a Teck Cominco class B share.

The deal is dependent on Inco dropping last October's friendly C$12.8bn bid for Falconbridge. Since then Falconbridge's share price has surpassed the $34ashare offer, closing at about $47 a share last week and breaching $50 a share in trading Monday morning.

Falconbridge is also the subject of a potential bid from Swiss mining firm Xstrata, which last August bought a 19.9% stake.

BMO Nesbitt Burns and Merrill Lynch are advising Teck Cominco.

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