Shareholders last night had to choose between Inco's final cash-and-stock offer, valued at $65.27, and an all-cash bid from Xstrata of $62.50 a share. Inco wanted at least 50.01% of Falconbridge's shares to go ahead, and said early this morning that it had not reached that threshold.

Inco will now turn its attention to selling shareholders on the company's plan to be taken over by Phelps Dodge Corp., which backed Inco's bid for Falconbridge and had planned to buy both Canadian miners once they had combined. It's likely there will be other companies bidding for Inco, an expectation that has driven Inco shares skyward.

Teck Cominco Ltd. of Vancouver has already made a bid for Inco and Rio Tinto of the U.K. and Brazil-based Companhia Vale do Rio Doce are considered other probable suitors.

"Ideally, I would like to see Teck Cominco end up with Inco," said Charl Malan, a senior analyst at New York-based Van Eck Global, which owns Inco shares. "I would love to see that happening. But at the end of the day I'm going to vote for whoever gives me the most money and makes the most sense."

Inco shares rose $2.56 to $86.57 by the close of trading today as shareholders bet that the company will sell for a fat premium. Falconbridge shares, meantime, traded just under the value of the Xstrata bid, at which they have hovered all week, a strong signal that Xstrata was going to win.

Toronto-based Inco didn't disclose how many Falconbridge shares were tendered to its offer, which expired at midnight Vancouver time. Those that were tendered will be returned to their owners.

"Though a large number of Falconbridge shareholders supported our offer, unfortunately it wasn't enough," Scott Hand, chairman and chief executive officer of Inco, said in a statement. "This is disappointing news for the many people at Inco and Falconbridge who have worked very hard to realize this transaction and create what we believe would have been a truly great mining company. I thank everyone for the many long hours and effort they have contributed. But the Falconbridge shareholders have spoken, and we're moving on."

Inco and Falconbridge are considered prizes because of the rising price of metals. Inco is the world's second-largest nickel company while Falconbridge is the third. Falconbridge also sports a copper component.

Hints that there might be a battle for Toronto-based Falconbridge emerged last August when Xstrata bought a 19.9% stake in the company from Brascan Corp. Switzerland-based Xstrata paid Brascan (now Brookfield Asset Management Inc.) $28 a share. It was Inco's October bid, however, that kicked off the auction. Inco made a friendly offer of $7.50 in cash plus 0.524 of an Inco share for each Falconbridge share. Xstrata responded in May with an all-cash offer of $52.50.

Since then, the price has ratcheted higher in a series of counterbids.

Xstrata is fond of Falconbridge's copper assets, but would also benefit from its nickel mines, something Xstrata completely lacks. Inco, on the other hand, is pure nickel and has mines side-by-side with Falconbridge sites in Sudbury. Inco wanted to merge those mines to generate $550-million in synergies.

Shares of Xstrata have soared this week on optimism the company would win the battle and add Falconbridge's assets to its stable of coal, copper and zinc mines.