Xstrata PLC has advised Inco Ltd. (N) that it won't accept Inco's pending competing offer to purchase the outstanding shares of Falconbridge Ltd. (FAL).

Inco and Xstrata, which holds a 19.8% stake in Falconbridge, are in a bidding war for the Canadian copper, zinc and nickel producer. Xstrata's offer is open until July 7.

If Inco does ultimately proceed to complete the acquisition, Xstrata currently intends to exercise the statutory right to dissent and demand payment in cash of the fair value of the shares its holds in Falconbridge, according to a filing made Monday with the Securities and Exchange Commission.

On May 18, Xstrata, Falconbridge's largest shareholder, offered C$52.50 (US$47.74) a share for the 80% of Falconbridge it doesn't already own.

Inco, a Canadian nickel miner, is offering C$7.50 a share in cash and 0.524 an Inco share for each Falconbridge share. Based on Inco's current stock price of $61.70 a share, Inco's offer valued Falconbridge at about $39.15 a share.