Phelps Dodge Statement On Revised Xstrata Offer For Falconbridge

Phelps Dodge Corporation today issued the following statement regarding Xstrata Plc’s revised offer for Falconbridge Limited:

“We are not surprised by Xstrata’s increased bid for Falconbridge, given the attractiveness of the Falconbridge assets. Based on the terms of our agreed combination with Inco, the implied value of Inco’s offer for Falconbridge is C$61.04 per share based on yesterday’s closing price of Phelps Dodge shares. The value of the Inco offer is therefore currently superior to the Xstrata offer, & we continue to believe the friendly 3-way agreed deal between Phelps Dodge, Inco & Falconbridge also will provide the greatest long-term value for Falconbridge shareholders as well as net benefits to Canada that would not be available under Xstrata’s hostile offer. Importantly, Falconbridge shareholders will have the ability to participate in the upside resulting from the 3-way combination through their ownership of almost 30% of the combined company, which is not the case with Xstrata’s cash offer. This upside includes a 30% share in the $900 million of expected synergies, which have a net present value of $5.8 billion.”