Noranda lets exclusive deal with Minmetals expire (November 16, 2004)

The belle of the ball is no longer limited to the Beijing two-step and is free to dance with whomever she pleases.

Potential Noranda (NRD-T) suitor China Minmetals may have to learn a new number if it wants to secure a majority holding in the base metals titan, now that Minmetals’ exclusive period of negotiations has expired.

Noranda says negotiations with Minmetals are continuing on a “non-exclusive” basis.

Minmetals had been in exclusive talks since late September regarding the acquisition of 100% of Noranda’s common shares, 42% of which are owned by Toronto-based Brascan (BNN.A-T).

Brascan said in September that Minmetals’ preliminary plan was to acquire, mostly for cash, all of Noranda’s shares at “a small premium to the recent trading level of Noranda’s common shares.”

The Canadian miner’s market value tallies to $6.35 billion, based on its closing price of $21.30 per share in Toronto on Nov. 16. Noranda has a long-term debt of slightly less than US$3 billion.

Minmetals’ non-binding proposal would also see Noranda’s aluminum division spun off as a separate enterprise in a distribution to shareholders.

Many pundits are suggesting that with Noranda swallowed, it would only be a matter of time, and perhaps an easing of metal prices, before Minmetals would move to consolidate ownership of Falconbridge (FL-T), the world’s third-largest nickel producer. Noranda currently holds a 59% stake in its subsidiary.

Minmetals, formerly China National Metals & Minerals Import & Export Corp., is a major metals trader, which had about US$12 billion in revenue in 2003. It is listed on the Shanghai Stock Exchange but is directly controlled by the Communist Party of China’s Working Committee for Large Enterprises.

Any deal for Noranda would be subject to approval by the Canadian government.