Until the coup de theatre of yesterday afternoon

The thorny case of the acquisition of Falconbridge was being sealed off by a full success of Xstrata ("Les Echos" of yesterday), the cursor of the consolidation in Canadian mines returned to Inco, unlucky companion of roped the same Falconbridge, and currently engaged in a difficult reconciliation with the American Phelps Dodge. His two pursuers, his compatriot Teck Cominco and the Brazilian Companhia Vale do Rio Doce (CVRD), seemed to turn left for a new arm of iron to the uncertain outcome, around a now lonely Inco. Until the coup de theatre of yesterday afternoon. Teck Cominco who, late in the night of Tuesday, had yet delivered its first response to the carioca colossus of iron ore within its offers 89 dollars the action of Inco and by pushing back the deadline to August 30, there was suddenly. In the wake the Vancouver-based company had yet significantly increased the portion of its offer in cash, the wearing of 40 to 71,20 Canadian dollars. The share in cash from 45-47 to 80 of the total of the price.

The announcement of this new proposal for Teck Cominco has surprised everyone. Except, perhaps, financial advice of the Canadian (BMO Capital Markets, Merrill Lynch Canada, TD Securities and CIBC World Markets), responsible for organizing the pre-placement of shares (b) of Teck Cominco for a minimum of US $ 5.15 billion. This recapitalisation should be used to finance the rehabilitation of the Inco offer and, in particular, its component in cash. "We have received strong support on the part of a large number of institutional investors, but, in fine, we have not managed to complete the placement under acceptable conditions for Teck Cominco", admitted Don Lindsay, Executive President of the society. This is why the firm chose to retreat and return to the previous project of 40 Canadian dollars in cash over transaction 0,581 action B by title of Inco. More importantly, the company decided to spin its proposal until its term prior to last night. Implicit admission of failure because it is more than likely that Teck Cominco will not bring two thirds of its target actions necessary further redemption.

The advantage of the offer in cash

Indirectly confirming this assessment, the pattern of Teck Cominco stated that his group now turns to any other, "numerous" opportunities. He studied including acquisitions in uranium ("Les Echos" from August 11) and in iron ore, "echos" has given a close source of the company.

The track is so wide open to CVRD, with its proposal any 86 Canadian dollars cash action, should not meet an effective resistance on the part of Phelps Dodge, object, to a sling on the part of many of its shareholders, opposed to the marriage with Inco. They include Fund Atticus Capital, first shareholder in the us with 10 of the capital. The Phoenix firm calls for a general meeting for September 25, in which shareholders will have to pronounce on the merger with the Canadian. But Phelps Dodge was unlikely to prevail as long as it retains the current form of the transaction, only 22.8 of the price is in cash (20,25 dollars). The withdrawal of Teck Cominco and the victory of Xstrata on Falconbridge by offer entirely in cash demonstrate that only this kind of proposal please shareholders, aware that the current mining consolidation at the top of the cycle of the course of mineral resources. Therefore, prices historically very high. Where the fear of a reversal of the upward trend and, thereby, to a significant decrease in the valuation of the companies in the sector. Thus, their appears wiser to realize capital gains today than to risk losing a substantial fraction tomorrow.