Companhia Vale do Rio Doce, the Brazilian iron-mining powerhouse, on Wednesday became the likely winner of the complex bidding war to acquire Canadian nickel giant Inco, as one of two rival suitors gave up.

Teck Cominco, a Canadian zinc miner that only Tuesday said it would raise its hostile offer for Inco, announced on Wednesday that it was unable to finance its new bid and would withdraw.

Companhia Vale do Rio Doce must still compete with copper miner Phelps Dodge, which has a friendly pact to buy Inco. That accord can be canceled if a better offer for Inco comes along. Inco said Tuesday it would negotiate with CVRD while remaining bound to back the Phelps bid for the time being.

While the Phelps' bid of $89.11 Canadian ($79.79) is higher than CVRD's $86 Canadian ($76.59), the latter – announced last week – is all cash, something that makes it more attractive, according to Leo Larkin, an analyst for Standard & Poor's Equity Research.

The markets appeared to agree with Larkin in afternoon trading on Wednesday, as shares of Phelps Dodge rose slightly. Indeed, because Phelps' bid consists of roughly 75% stock, the lower the chances its bid will succeed, the more valuable its shares become. Investors are willing to pay more for its shares if they think the company won't make what they see as an expensive acquisition.

While Inco's board has consistently backed the Phelps bid, shareholders at both companies appear to have reservations. At least one of Phelps' major stockholders, Atticus Capital, has said it will vote against the combination because of the amount of debt the firm would incur in the process. And the United Steelworkers, which represents workers at Inco, has favored Teck.

Meanwhile, Inco shares fell more than 2.5% in afternoon trading on news that Teck changed its mind about sweetening its bid. On Tuesday the zinc miner said it would offer Inco shareholders $89 Canadian ($79.25), of which at least $71.20 ($63.40) would have been in cash.

Teck had hoped to sell at least $5.725 billion Canadian ($5.1 billion) of its class B stock to help finance the purchase. But on Wednesday, the company said it could not complete the offer on acceptable terms. Previously, Inco had spurned the Vancouver-based company's bid of roughly $77.42 Canadian ($68.94), which was set to expire Wednesday.

While it appears that CVRD will win this drawn-out, complicated bidding war, shares of the company rose 2.5% on Wednesday afternoon – something that may indicate investors think yet another bidder will come along and top the Brazilian company's offer.

"That's the only explanation why someone would be buying CVRD at this juncture, since it appears they are the apparent acquirer," said Larkin.

Indeed, rumors have circulated that larger mining companies, such as BHP Billiton or Rio Tinto, could make an offer.

Regardless, if CVRD wins, that could spell takeover for both Phelps Dodge and Teck, the latter of which saw its shares rise 2.7% in afternoon trading.

"Certainly Phelps Dodge has been talked about as a potential takeover," said Larkin. "It's generating enormous sums of cash and has little debt, although you might be buying at the peak of the cycle."