Teck Cominco, the worldâ€™s largest zinc producer, has withdrawn its offer for mining giant Inco, after failing to raise enough cash to fund the acquisition.
Teck Cominco, based in Vancouver, Canada, had announced today that it failed to raise more than $5.7 billion overnight by selling its class B shares, due to lack of interest by investors. The money would have been used to fund the hostile acquisition of Inco, also based in Canada. Teckâ€™s bid for Inco was thrown into disarray after Companhia Vale do Rio Doce's, CVRD, a Brazilian mining company, made a rival bid.
â€œWhile we received strong support from a large number of institutional investors, in the end we could not complete the proposed equity offering on terms that made sense for Teck Cominco,â€ said President and Chief Executive Officer Don Lindsay from Teck Cominco. â€œAccordingly, we will not amend or extend our bid for Inco.â€
Currently there were still two contenders for Inco. CVRD which has offer $86 Canadian dollars a share in cash. Another was a friendly bid by mining company Phelps Dodge, which was offering C$20.25 in cash, plus 0.672 of a share for each Inco share.
â€œWe will now pursue some of the many other opportunities we see to grow Teck Cominco and to add value for our shareholders, both through enhancements to our existing assets and through acquisitions,â€ said Lindsay.
Teck Cominco is a diversified mining company. It recorded earnings of $613 million for the second quarter of 2006 and its net revenues for the same period were $2 billion. This quarter, earnings were mainly driven by higher prices for copper and zinc.