Noranda and Falconbridge merge
On March 9, 2005, Noranda Inc. announced an all-encompassing plan to combine Noranda and Falconbridge Ltd. to create one of North America's largest base-metals companies. The transaction was proposed to help resolve the dual public ownership structure of Noranda and Falconbridge, and brought Noranda's strategic alternatives review process to a close. The combination was unanimously recommended by the independent directors of Falconbridge and was effected by way of a share exchange takeover bid in which each Falconbridge shareholder other than Noranda was offered 1.77 Noranda shares for each Falconbridge share. The offer represented a 15 percent premium to the 20-day average share price for the period ending March 7, 2005. Approximately 58 million Falconbridge common shares were validly deposited under the bid, representing 78 percent of the shares held by minority shareholders, and Noranda took up the shares on May 6, 2005. Noranda completed its combination with Falconbridge on June 30, 2005 by way of an amalgamation with Falconbridge. The name of the combined company is Falconbridge Limited.
Prior to the takeover bid transaction, Noranda repurchased 63.4 million of its common shares in exchange for three series of junior preferred shares of the company (the issuer bid) with an aggregate stated value of US$1.25 billion, by way of substantial issuer bid. As part of the transaction, Brascan agreed to tender its common shares of Noranda to the issuer bid. Immediately following the completion of Noranda's combination with Falconbridge, Brascan's ownership of common shares was reduced to approximately 20 percent from the approximately 41 percent it held in Noranda prior to these transactions.
The benefits of the transactions include the simplification of the ownership structure of Noranda and Falconbridge and a substantial increase in the public float and share liquidity of the combined company. The larger market capitalization and simplified corporate ownership structure is expected to attract a greater institutional investor base for the combined company, while the increased size, diversification and financial capability of the new combined company is expected to facilitate future growth.