Inco offers hopeful note in rejecting Teck Cominco bid

Canada's biggest nickel minerhas rejected a recently raised takeover offer from Teck Cominco Ltd., but has left the door open for talks with its would-be Vancouver suitor.

Teck boosted its bid for Inco Ltd. by $2.7 billion — to$82.50 a share from $78.50 a share — on July 31.

Inco said Monday the board had studied the higher bid, and"has unanimously recommended that Inco shareholders reject the amended Teck offer."Shareholders shouldback the takeover bid by Phelps Dodge Corp. of Arizona, Inco said.

The board concluded that thehigher Teck bid is not a "superior proposal," as defined inits deal with Phelps Dodge.However, the Teck offer "could reasonably be expected to result in a 'superior proposal,' " Inco said,raising the possibility the Teck offer could still somehow win the board's support.

In light of that possibility, the board also authorized Inco management to negotiate with Teck, presumably about the terms of its offer. No details were released.

Teck raised itsbid to persuade Inco's board and shareholders that its bid is better than the friendly Phelps Dodge proposal.

On Monday, Teck said it had seen Inco's press release and "continues to believe that its offer for Inco is superior to the Phelps Dodge offer." It didn't say why.

The U.S. company is bidding $20.25 plus 0.672 of a Phelps Dodge share for each Inco share.

Teck Cominco's July 31 offer is for cash or 1.1293 Teck share plus five cents for each Inco share. But the cash component is capped at $9.1 billion, so if all shareholders chose that option, they would get $40 cash and 0.5821 of a Teck Class B share for each Inco share.

The Toronto Stock Exchange was closed Monday for the August holiday. In trading in New York, Inco stock fell 63 cents to $78.75 US. Phelps Dodge shares rose 58 cents to $86.95 US.

Teck rose $1.04 to $81.15 on Friday in TSE trading.