Teck-Cominco, the Vancouver-based coal and zinc producer, unveiled plans on Tuesday to raise its hostile bid for Inco in a quest against two other suitors for control of the western world’s biggest nickel miner.
Teck’s announcement came shortly after Inco opened the door to a possible deal with CVRD, the Brazilian iron ore producer.
CVRD’s $17.6bn cash offer, tabled last week, had appeared to have the edge over cash-and-shares bids by Teck and Phelps Dodge, an Arizona copper producer.
Teck said that its latest bid, described as its “best and final” offer, would be valued at C$89 ($79.14) for each Inco share, with the cash component making up at least 80 per cent of the total. CVRD has offered C$86 in cash per share.
Teck plans raise C$5.7bn through an issue of subordinated voting shares, conditional on it acquiring at least two-thirds of Inco’s stock. Its latest offer expires on August 30.
Inco agreed earlier this summer to support a deal with Phelps as part of a joint bid for Falconbridge, another Toronto-based nickel producer. Falconbridge subsequently succumbed to a rival offer from Xstrata, the Anglo-Swiss metals group.
Inco said on Tuesday that the deal with Phelps required it to continue advising shareholders to support the Arizona company’s bid.
However, Inco’s board has authorised management to open talks with CVRD on the grounds that the Brazilian offer “could reasonably be expected to result in a ‘superior proposal’.”
Separately, CVRD has disclosed that it was approached by Inco earlier this year as part of the Canadian company’s campaign to defend itself against Teck’s advances. The contacts ended about a month later when Inco forged its alliance with Phelps.
CVRD said in a regulatory filing that it planned to take Inco private if its bid succeeds. The Brazilian group added that it “currently intends to use Inco as the platform for its global base metals operations and may . . . combine certain of its other base metal operations with Inco or dispose of certain assets of or interests in Inco”.
Teck’s chief executive Don Lindsay insisted last week that “we will not be drawn into an expensive bidding war for Inco”.