Xstrata makes 52.50 cad all cash offer for Falconbridge

Xstrata makes 52.50 cad all cash offer for Falconbridge

LONDON (AFX)

17th May 2006

Xstrata PLC said it has made a fully underwritten all-cash offer of 52.50 cad per share for Canadian nickel producer Falconbridge Ltd.

The Anglo-Swiss copper miner, which already owns 20 pct of Falconbridge, said the combination of the two companies will create the world's fifth largest diversified mining company. Its offer values the whole of Falconbridge at 20 bln cad.

Xstrata also said it expects the offer to be substantially earnings and cash flow enhancing in the first full year of consolidation.

Falconbridge is currently also subject to a recently revised offer from Inco Ltd. Xstrata said its offer represents a 12.3 pct premium over Inco's all-share offer, based on the May 5 share price for Inco.

Xstrata pointed out that the Inco offer is unclear for shareholders as it is based on Inco's share price which is currently being inflated by an offer for the group from Teck Cominco Ltd. The Teck Cominco offer for Inco is conditional on Inco not buying Falconbridge so Xstrata points out that, if Inco is successful in its bid for Falconbridge, its share price will inevitably fall as Teck Cominco walks away.

Xstrata's offer for Falconbridge is open until July 7 and Inco has seven days to match it. Inco's offer is currently due to close on June 30.