Inco Ltd., the world’s second-biggest nickel producer, won European antitrust approval to acquire rival Canadian mining company Falconbridge Ltd. for C$19.5 billion ($17.6 billion) after agreeing to sell a Norwegian refinery.
“I am satisfied that the remedies will allow the emergence of a fully fledged competitor and at the same time preserve competition in the nickel and cobalt markets,” Neelie Kroes, European competition commissioner, said in a statement today.
The two Toronto-based companies are the target of a $35.4 billion friendly takeover announced by U.S. copper producer Phelps Dodge Corp. on June 26. A successful combination of the three companies would represent the world’s largest mining takeover and thwart Xstrata Plc’s hostile bid for Falconbridge and an offer from Inco by rival Canadian miner Teck Cominco Ltd.
The value of metals and mining takeovers this year has surged to $135 billion from $38.8 billion at this time last year as companies found acquisitions a quicker way to growth than exploration and commodity prices surged to records, according to data compiled by Bloomberg.
Inco agreed in October to buy Falconbridge as metals prices surged the past two years because of a building boom in China. Inco and Falconbridge combined is the world’s biggest producer of nickel, which has soared 48 percent this year and traded in May at a record. The transaction has already been cleared in Canada and the U.S.
European Union regulators approved the takeover after Inco found a buyer for Falconbridge’s Nikkelverk refinery in Kristiansand, Norway.
The EU agency required Inco to find a buyer in the mining business rather than an investment company. Inco said on June 7 that it will sell Nikkelverk to LionOre Mining International Ltd. for $650 million in cash and stock.
“The proposed remedy package offers sufficient guarantees to ensure the divested business’s feed supply and its ability and incentive to compete with the new entity,” the European Commission, the EU’s Brussels-based antitrust authority, said in the statement.
Nickel is used in batteries and to prevent corrosion in stainless steel. The commission, which on Feb. 24 opened a four- month probe of the deal, said at the time that Inco and Falconbridge are the two leading suppliers of nickel used as a coating.