Inco tells shareholders to back Phelps Dodge offer

Shareholders of Inco Ltd. are being urged again by the company to support itstakeover deal withNevada's Phelps Dodge Corp.

Inco's board of directors told shareholders on Tuesday to reject the $17-billion all-cash offer for the company from Brazil's Companhia Vale do Rio Doce.

On Aug. 11, CVRD said would offer $86 per share for Inco, the world's No. 2 nickel producer.

Inco said CVRD has indicated that it is not willing to enter into negotiations on improving its offer.

"Accordingly, the Inco board has determined to continue to recommend that Inco shareholders vote in favour of the arrangement with Phelps Dodge and to recommend that Inco shareholders reject the CVRD offer," the company said.

When it unveiled its bid earlier this month, CVRD said it was drawn to Inco because it is the second-biggest nickel producer in the world, with assets in Canada, New Caledonia and Indonesia. Also, its production costs are among the world's lowest.

The Phelps Dodge bid for Inco is worth $85.79 in cash and stock, based on the Monday closing price of Phelps Dodge's stock on the NYSE and Canada-U.S. dollar exchange rate.

Inco shareholders are to vote on Sept. 7 whether to accept the Phelps Dodge offer.

Shares of Inco were off 50 cents at $85.60 on the TSX, while Phelps Dodge gained 32 cents to end at $88.14 US a share on the NYSE.