Phelps Dodge Drops Inco Bid

Date: Wednesday, September 6, 2006
Author: HFN Daily Report

Hedge fund Atticus Capital got what it wanted when mining company Phelps Dodge dropped its bid for Canadian nickel miner Inco on Tuesday.

Inco is supporting a rival bid by Brazilian mining giant Vale do Rio Doce. Inco will pay Phelps Dodge a $125 million breakup fee and will have to pay another $350 million if it concludes a deal with Vale in the next year.

Atticus has opposed takeovers by Phelps Dodge, the second-largest copper producer in the world. Phelps Dodge also failed to acquire nickel miner Falconbridge after Xstrata made a higher offer.

Earlier this year, Phelps Dodge rejected a plan by Atticus to take on more debt to finance a share buyback scheme. New York-based Atticus controls about 8% of the company and is its second-largest shareholder after Barclays.