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. Last Updated: 07/27/2016

Xstrata Bids for Mining Merger

LONDON -- Xstrata, seeking to thwart a merger of two Canadian rivals, made an unsolicited 16.1 billion Canadian dollars ($14.6 billion) bid for Falconbridge to create the world's fourth-largest mining company.

Xstrata will pay 52.50 Canadian dollars ($47.41) per share in cash for the 80 percent of the Canadian miner it does not own, the Zug, Switzerland-based company said in a statement on Wednesday. The proposal is 12 percent more than Inco's May 13 agreement and values Toronto-based Falconbridge at 20 billion Canadian dollars, Xstrata said.

"Xstrata's not going to go away, Inco's going to have to fight for this one," Mark Pervan, head of research at Daiwa Securities SMBC, said in an interview in Melbourne, Australia, on Wednesday. Wednesday's bid shows Xstrata "wants to be one of the bigger players in the market."

Chief executive officer Mick Davis, backed by Swiss shareholder Glencore International, wants to create a mining company on five continents that rivals BHP Billiton, Rio Tinto Group and Anglo American. Falconbridge has become a prize for both Davis and his Inco counterpart, Scott Hand, after a more than three-year rally in metals drove prices to records.

"Xstrata has a good chance of getting Falconbridge, but they'll have to pay more than the current offer," said Nick Hatch, a mining analyst at Investec in London who has a "hold" recommendation on Xstrata.