The Valley will become the home of one of the world’s largest mining companies if plans by Phelps Dodge Corp. and two Canadian mineral producers materialize.
Phoenix-based Phelps Dodge said it will acquire Inco Ltd. and Falconbridge Ltd., both based in Toronto, in a $40 billion deal that would create the largest mining firm in North America and the fifth largest in the world.
The new company will be called Phelps Dodge Inco Corp. and will maintain its corporate and copper division headquarters in Phoenix. Inco Nickel, the new company’s nickel division, will be based in Toronto.
The new company will combine Phelps Dodge’s strength in copper and molybdenum mining with Inco’s position in nickel and Falconbridge’s strength in copper and nickel.
‘‘We’re extremely excited about the powerhouse we’re creating,’’ Phelps Dodge chief executive J. Steven Whisler told a conference call with analysts Monday. ‘‘We truly have the chance to step up to the big leagues by combining our three companies.’’
The new firm will have nearly 40,000 employees in more than 40 countries worldwide. Phelps Dodge has guaranteed no mining or processing layoffs for three years, but the company said some administrative positions may be cut in Canada.
Phelps Dodge spokesman Jim Telle said the company doesn’t expect administrative staff changes in Phoenix, but it will increase employment in the Safford area as it gears up development of a new copper mine.
Construction could begin as early as next month if a final air-quality permit is obtained from the Arizona Department of Environmental Quality, Telle said.
Copper production at Safford is expected to begin in a year and a half, he said.
The activity comes at a time when metal prices are sky high, driven by strong global demand from China and elsewhere.
Inco had already been trying to acquire Falconbridge, and the Phelps Dodge proposal will allow Inco to sweeten its offer for Falconbridge. Both Inco and Falconbridge have been the targets of other takeover attempts.
While the Inco-Falconbridge deal awaited regulatory approva l, Vancouver-based Teck Cominco Ltd. made a bid for Inco and the Swiss mining company Xstrata PLC sought Falconbridge.
Xstrata and Teck Cominco did not comment on the latest developments Monday.
The three-way deal has been approved by the boards of each company but still must be approved by regulators and shareholders. The companies said they expect the transaction to close as soon as September.
Whisler, 51, will become chairman and chief executive of the combined company, while Inco CEO Scott Hand, 64, will become vice chairman and Falconbridge CEO Derek Pannell, 60, will become president of Inco Nickel.
Job reductions, bulk purchases and other synergies are expected to save the new company $900 million within two years.
Savings are expected to be significant in the nickelproducing Sudbury Basin in Ontario, where Inco and Falconbridge have contiguous, interwoven mines and processing plants.
Phelps Dodge also said it will bring new technology that can be applied to the Canadian operations.
‘‘I know our cultures are compatible and our people will be treated with respect,’’ Falconbridge’s Pannell said in the conference call.
He added in a written statement that “this is an industryredefining transaction. Phelps Dodge Inco will have the scale, diversification, market leadership, reserve position, growth profile and balance sheet necessary to create tremendous value for shareholders.”
As part of the deal, Phelps Dodge announced a share repurchase program of up to $5 billion after closing to shore up the new company’s stock price.
Under the proposal, Inco shareholders will receive 0.672 shares of Phelps Dodge stock plus 17.50 Canadian dollars ($15.59 U.S.) per share in cash for each share of Inco stock, representing a premium of 23 percent to Inco’s market price as of the close of trading on June 23.
Inco in turn will increase its previous offer for Falconbridge to 17.50 Canadian dollars ($15.59) from 12.50 Canadian dollars ($11.14) and the exchange ratio to 0.55676 shares of Inco, from 0.524 shares, for each share of Falconbridge.
Based on the value of Phelps Dodge’s total offer for Inco of 80.13 Canadian dollars ($71.40) per share, the company said the implied value of Inco’s increased offer for Falconbridge is 62.11 Canadian dollars ($55.34), which is a 12 percent premium to Falconbridge’s closing price on June 23.
The Phelps Dodge acquisition of Inco is not contingent on Inco’s acquisition of Falconbridge. If that merger falls through, Inco shareholders still will receive the same stock and cash offer they would have received in the three-way transaction, the companies said.
The Phoenix company said it has arranged $22 billion in financing from Citigroup and HSBC while Inco has received additional financing commitments from four banks to increase its cash offer for Falconbridge.
After completion of the transaction, current Phelps Dodge shareholders would own about 40 percent of the new company, Inco shareholders about 31 percent and Falconbridge shareholders about 29 percent.
Following the announcement, Phelps Dodge shares tumbled 8 percent, or $6.72, to finish at $76.23 on the New York Stock Exchange.
Inco advanced 10 percent to $64.21 and Falconbridge rose 5 percent to $51.80.
- The Associated Press contributed to this report.