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Jim Letourneau's Blog

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Bigger and Better

Big base metal happenings today in the Mega Monster Metal Mayhem portfolio.

Noranda (NRD.TO) and Falconbridge (FL.TO) are merging to create a 14 billion dollar mining giant. Noranda already owned 58.8% of Falconbridge. Here are the higlights from the news release:

  • The boards of Noranda and Falconbridge have unanimously agreed to combine the two companies by way of a share exchange.

  • Each Falconbridge shareholder will receive 1.77 Noranda shares for each Falconbridge share, which represents a 15-per-cent premium to the 20-day average share price for the period ending March 7, 2005. Each existing Noranda common share will represent one share of the new combined entity.

  • Prior to the merger, Noranda will offer to repurchase 63.4 million of its common shares, in exchange for three series of junior preferred shares of the company with a total stated value of $1.25-billion (U.S.).

  • Brascan, the owner of approximately 41 per cent of Noranda common shares, has indicated that it will tender its common shares to the $1.25-billion (U.S.) issuer bid. On completion of the merger and issuer bid, Brascan's ownership position will decline to between 16 per cent and 26 per cent of the new entity.

  • The transaction simplifies the ownership structure and substantially increases the public float and share liquidity of the new company.

  • The larger market capitalization and simplified corporate ownership structure are expected to attract a greater institutional investor base for the combined company.

  • The increased size, diversification and financial capability of the new combined company will facilitate future growth.

    This makes for a nice politically safe "made in Canada" merger. China Minmetals was looking to acquire Noranda. A takeover of NorandaFalconbridge might still be in the works down the road.


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