Rio de Janeiro - Vale do Rio Doce completed its takeover of Inco, the world's second-largest nickel maker, putting the Brazilian company on course to become the top nickel producer by 2009.
Rio de Janeiro-based Vale, the world's largest iron ore producer, said that 75.66 percent of Inco shares were tendered in the offer, for which Vale paid C$15 billion (R102 billion). Vale said it was extending the offer until next Friday to acquire the remaining shares. The takeover is the biggest foreign acquisition by a Brazilian company.
In line with the objective of acquiring all of Inco's traded shares, Vale intended to take measures to acquire Inco's remaining ordinary shares in the market, the company said.
The acquisition, part of chief executive Roger Agnelli's plan to expand the company beyond its Brazilian borders and into markets other than iron-ore, allows Vale to add new nickel capacity in Brazil, Canada and Indonesia.
Nickel is a key element for the production of stainless steel, which is used in products from surgical instruments and cutlery to skyscrapers and aeroplanes. The metal has doubled in price this year and quadrupled since the 1990s.
Agnelli said acquiring Inco would allow Vale to gain supplies of nickel to deliver alongside iron ore to steel-making customers such as Thyssen-Krupp. Inco, which employs 10 000 people, has 19 percent of the world's nickel market. Russia's Norilsk is the largest producer.
Vale on October 13 extended its offer for Inco to Monday this week to give regulators in Canada time to review the bid. The offer of C$86 a share for Toronto-based Inco was extended to midnight Toronto time from an earlier deadline of last Monday.
To demonstrate to Canadian regulators that the acquisition would benefit the country, Vale pledged to base its global nickel division, called CVRD Inco, in Toronto. A Canadian chief operating officer would be appointed to head CVRD Inco, along with a senior executive team comprised largely of Canadians, Vale said. The company would have "a mandate to expand its businesses as a global leader in the nickel industry", Agnelli said.
"CVRD would transfer management responsibility for its interest in existing and future nickel projects to CVRD Inco, including its interest in the Onca Puma and Vermelho projects in Brazil," Vale said.
The producer, which employs 10 000 people, said there would be no lay-offs at Canadian operating facilities for at least three years, "and in any event, total employment at such facilities will not fall below 85 percent of current levels".
Vale's takeover brings an end to a 12-month battle for Canada's nickel assets after 104-year-old Inco proposed to acquire Falconbridge on October 11.
Falconbridge shareholders instead accepted an all-cash bid from Anglo-Swiss producer X-strata in July, rejecting a three-way deal with Inco and Phelps Dodge that would have created a $40 billion (R305 billion) metals giant. Vale won the battle for Inco after Vancouver-based Teck Cominco and Phelps withdrew their competing offers.
Vale's shares rose 0.9 percent to close at 44.50 Brazilian reals (R160) yesterday, while the Bovespa index rose 1.5 percent. Inco's shares closed at C$85.87. - Bloomberg