Xstrata plc successfully acquired Falconbridge Limited in the largest global mining takeover to date and one of the largest takeover bids in Canadian history. Xstrata is now the world's fifth-largest diversified mining company, with leading market positions in copper, thermal and coking coal, ferrochrome, zinc, nickel and vanadium, together with an aluminum business, recycling facilities additional exposures to gold, lead, silver and platinum group metals and a suite of global technologies.
Xstrata announced an unsolicited, all-cash takeover bid for all the issued and outstanding common shares of Falconbridge on May 17, 2006, at which time it owned 19.8 per cent of Falconbridge. Xstrata's initial offer was for $52.50 cash per share, valuing the total common share capital of Falconbridge at approximately $20 billion.
At that time, Inco Limited and Falconbridge were in the process of obtaining regulatory approval for a friendly offer by Inco to acquire the Falconbridge common shares. A few days before the announcement of the Xstrata offer, Inco increased the cash element of its offer by $5 to $12.50 in cash and 0.524 of an Inco common share per Falconbridge common share, assuming full pro ration.
Inco announced a further increase in its offer on June 26, 2006 in connection with a proposed three-way deal with Phelps Dodge Corporation, whereby Phelps Dodge would assist with the financing of Inco's bid for Falconbridge and Phelps Dodge would acquire Inco whether Inco was successful with the Falconbridge acquisition or not. In May 2006, Teck Cominco Limited had launched a hostile offer for Inco.
On July 11, 2006, Xstrata announced an increase to its all-cash bid to $59 per share, valuing the total common share capital of Falconbridge at approximately $22.5 billion. On July 16, 2006, Inco announced another increase in its share and cash offer price and Falconbridge announced a special dividend of $0.75 per common share, payable to holders of record the day before the expiry of the Inco bid.
In response, Xstrata again increased its offer on July 19, 2006 to $62.50 in cash per share, which when combined with the Falconbridge special dividend, afforded Falconbridge shareholders with $63.25 in cash per common share. The increased Xstrata offer, together with the special dividend, valued the total common share capital of Falconbridge at approximately $24.1 billion.
Inco announced on July 28, 2006 that it had let its bid for Falconbridge expire, having failed to meet its minimum tender condition of 50.01 per cent.
Xstrata subsequently acquired Falconbridge common shares in the market and under its offer and on August 26, 2006 announced that it owned approximately 97.1 per cent of the common shares of Falconbridge on a fully diluted basis. Xstrata also announced at that time that it would commence the compulsory acquisition of all outstanding common shares not already owned by Xstrata.
Xstrata's in-house team was led by Benny Levene and included Dominic O'Brien. Xstrata's Canadian and United States external counsel was Davies Ward Phillips & Vineberg LLP, with a team that included Bill Ainley, Kenneth Klassen, Alex Moore and Kevin West, with Richard Elliot (competition), Ian Crosbie and John Zinn (tax), Kent Thomson and Jim Doris (litigation), and Gerald Shepherd and Darren Novak in New York (US advice).
Xstrata was also represented by Freshfields Bruckhaus Deringer in London, Washington and Brussels, with a team that included Julian Makin and Graham Watson (corporate law), Edward Evans and Tom Bussy (debt financing), MJ Moltenbrey and Bruce McCulloch (US antitrust) and Nicholas Spearing and Rafique Bachour (European antitrust).
Clifford Chance LLP acted as English counsel. Stikeman Elliott LLP acted as Canadian counsel to Xstrata's lenders and financial advisors with a team comprised of Derek Linfield, Peter Hamilton, Brian Pukier and Lewis Smith.
Falconbridge's in-house team was led by Jeff Snow and included Steve Young and John Whyte. Falconbridge's counsel was McCarthy Tétrault LLP with a team that included Garth Girvan, Frank DeLuca and Jonathan Grant, with Paul Steep, Dana Peebles, Harry Underwood and Eric Block (litigation); Gabrielle Richards (tax); Richard Miner, Ian Arellano, Amrit Sidhu and Dan Bornstein (corporate–sale of Nikkelverk); Robert Stephenson (banking); Alfred Macchione (intellectual property); Glen MacArthur (competition) and Tallat Hussain (environmental).
Falconbridge was advised on US securities matters by Fried, Frank, Harris, Shriver & Jacobson LLP with a team that was led by Kenneth Blackman and included David Golay and Talia Poleski. Falconbridge was advised on US competition matters by Freeborn & Peters LLP with a team that was led by David Gustman and included Jeffery Cross, Tonita Helton, Hillary Krantz, and Andrew Nordahl and by Baker & McKenzie's European & Competition Law Practice in Brussels with a team that included Fiona Carlin, Nina Niejahr and Joost Haans.