P. M. BRIEFING : U.S. Company’s Purchase of Nickel Firm Expected to Stir Canada Furor

Amax Inc., the big U.S. natural resources company, today agreed to buy Canada’s Falconbridge Ltd., the West’s second-largest nickel producer, for $2.4 billion in cash, the companies announced.

The surprise move, which could set off a furor in Canada, was made just before Wall Street opened today. The deal values Falconbridge at $36.125 a share, or $2.8 billion Canadian. Falconbridge shares on the over-the-counter market jumped $5.50 to $31.125 after a delayed opening.

The acquisition gives Greenwich, Conn.-based Amax, already a leader in a number of metals, a vastly expanded role as a producer of nickel, used in the manufacture of stainless steel. Prices of the metal have risen sharply this year due to low supplies, high demand and very little new capacity coming on stream.

The takeover of such a major Canadian natural resources company by a U.S.-based concern is bound to spark criticism. While foreign companies have held big stakes in Canadian natural resource companies, that has not been the case in the mining industry.