Falconbridge bid opposed by lawmakers, unions

Ottawa, May 18 | Updated: May 19 2006, 05:45am hrs
Canadian lawmakers and union leaders are opposing a $14.5 billion hostile bid for Falconbridge Ltd by Switzerlands Xstrata Plc because they want the nations natural resources to remain under domestic control.

We should be looking for a Canadian-made solution in protection of our natural resources and the communities that are affected, Brian Masse, industry critic for the opposition New Democratic Party, said on Wednesday in Ottawa. Foreign ownership may be devastating in areas dependent on mining, he said.

A takeover of Toronto-based metals producer Falconbridge by an overseas company would be terrible and put Canadian jobs at risk, said Leo Gerard, president of the United Steelworkers, which represents about 4,000 Falconbridge workers.

Union and political leaders say they prefer a friendly takeover by Toronto-based rival Inco Ltd that would create the worlds largest nickel producer. Local opposition may make it more difficult for Xstrata to complete the largest mining takeover ever.

Lawmakers have raised concerns previously about foreign takeovers, which dont require approval in the House of Commons. Noranda Inc failed to reach agreement on a deal to be acquired by China Minmetals Corp after seven weeks of exclusive talks in 2004. Noranda later merged with Falconbridge.

Some investors, who stopped short of saying they would reject a more valuable offer based on the nationality of the buyer, expressed concern that Canada might lose ownership of natural-resource assets.

Id be sad to see Falconbridge disappear from Canada, said Benoit Brillon, a fund manager with Natcan Investment Management in Montreal.

The minority government of Prime Minister Stephen Harper, which would review any foreign purchase, may be reluctant to approve an Xstrata deal with elections looming as early as next year, said Dany Assaf, a lawyer with Ogilvy Renault in Toronto.

Bloomberg