Canico finds new CVRD bid less hostile (November 11, 2005)

Companhia Vale do Rio Doce (RIO-N) has upped its offer for nickel developer Canico Resources (CNI-T) and Canico’s board has reversed its position against the offer.

CVRD is now offering $20.80 per share for Canico, up from the $17.50 per share it offered Sept. 15. The first bid had represented a 29% premium to the average price of Canico shares for the 30 days before the bid was made; the new bid raises that premium to 53%.

CVRD now has a lock-up agreement with Canico management and other significant shareholders for 11.5% of Canico’s shares. Inco (N-T, N-N) owns about 13.9% of Canico and a Brazilian-based holding company, Centennial Asset, holds 11.4%.

In recommending the offer to shareholders, Canico management also agreed to a $32.8-million break fee. Canico is also agreeing that the CVRD is a “permitted bid” under its shareholder-rights plan, which CVRD had already argued was the case with its original bid.