This investment has reported 2478 billion US

What had to happen happened. Widely anticipated by the mining communities and specialized analysts, the offer sought to Xstrata on Falconbridge, now valued 20 billion Canadian dollars (US $ 18 billion), was announced yesterday. And this three days only after the expiry of the transfer of 19.8 of the capital of the Canadian agreement established by Swiss diversified mining group with the reference shareholder of Falconbridge at the time, the investment Brascan (Brookfield Asset Management) company. The lapse of this agreement was essential for Xstrata, since May 14, is no longer required to pay the difference between the price per share paid in this first acquisition and that of its offer to the rest of the capital.

Wednesday is the largest ever launched in the mining sector where outbid move at a frenzied rate. The Inco and Falconbridge, Canadian couple promised to a marriage which was slow to materialize because of the obstacles on the gendarmes of the competition from the United States and the European Union, is in the eye of the cyclone. The first, launched in October 2005 a friendly bid on the second, also, made recently, the object of a hostile takeover bid for compatriot Teck Cominco (OPA of 17.8 billion). Today, Falconbridge is forced to defend its proposed merger with Inco re-evaluated Saturday to about $ 19 billion Canadian against Xstrata.

Support of Glencore

By meddling in this already well complicated folder, this last does not take many risks. If he does, it will definitely come in the Court of major mining groups, with a company able to compete with the leading Quartet current (BHP Billiton, Anglo American, Rio Tinto and CVRD). Its finances in order and its robust ability to generate the cash from its operations allow it to finalise the purchase of Falconbridge without jeopardizing its balance sheet and its organic growth.

In the wake of the announcement yesterday, Xstrata has placed without difficulty about 62 million shares (32.5 million new shares) and 29.5 million shares held by Batiss Investment, the Group investment vehicle. This investment has reported 2,478 billion US $. The group, based in Zug in Switzerland, draw 12 of the required us $ 19 billion in bank credit lines. The 7 remaining billion being assured by recapitalisation fully underwritten and guaranteed by bank credits.

The strength of his editing by Xstrata is reinforced by the support of Glencore. The number one global trading in physical natural resources, also based in Zug, is its reference shareholder with 37,61 of the capital. But fails, Xstrata, directed by Mick Davis, may assign to the high price of 19.8 in Falconbridge, paid, participation in mid-August 2005, "only" 1.7 billion US $. It thus empocherait added gross value of the order of $ 1.9 billion us on the basis of the current course of Falconbridge.

Close to the proposal of Inco

Apparently, the proposal of Xstrata seems close to that of Inco, revised last weekend: 52,50 Canadian dollars per share for the first, 51,17 per second. Their articulation, on the other hand, is very different: Inco Limited part in cash to 4.8 billion dollars, while Xstrata pay everything in cash. This is not a detail given to the indulgence of the shareholders of the mining companies for money. The market has already exceeded two offers with a course of Falconbridge of 55 Canadian dollars, yesterday, at the meeting, to the Toronto Stock Exchange. Therefore investors expect mostly to a bid of Inco.

This possibility is however considered unlikely by most analysts. Responding in the evening to the proposal of Xstrata, Derek Pannell, Executive Director of Falconbridge, said that the price advanced by the Swiss values not enough his company. In addition, he concluded, offer any cash denied Falconbridge shareholders to participate in the growth of the new entity. Conclusion: be preferred it the merger with Inco. On the other hand Inco ensures that its friendly bid is the best for the shareholders of Falconbridge.