Freeport-McMoRan Copper & Gold Inc.
) said that
Plains Exploration & Production Company
) will hold a special shareholders' meeting on May 20 to vote on
the proposed buyout of Plains by Freeport. Shareholders who held
Plains shares at the close of business on Mar 21, 2013, are
entitled to vote on the merger.
Freeport, in Dec 2012, forged definitive merger pacts to buy
McMoRan Exploration Co.
) for roughly $9 billion. The move represents a part of the
company's strategy to diversify away from its bread-and-butter
copper mining business.
Per the agreement, Freeport is buying Tex.-based independent
oil and gas company Plains for $50 per share in cash and stock.
Plains shareholders have been given an option to receive cash
or stock. Freeport is expected to pay $6.9 billion in cash to
Moreover, Freeport is paying $14.75 per share in cash to buy
La.-based exploration and production company McMoRan. McMoRan
shareholders will also get 1.15 units of a royalty trust for
each share they hold. While the total deal value is $3.4
billion, the actual cash portion of the transaction is $2.1
billion (excluding 36% interest currently owned by Freeport and
The total transaction value for the twin deals is roughly
$20 billion taking into account the debt to be assumed by
Freeport as part of the deal. The transactions are subject to
regulatory clearances and approval of the shareholders of the
respective companies and are expected to consummate in
The merger is expected to make the combined entity a leading
natural resource conglomerate in the U.S., leveraging
Freeport's industry-leading mineral assets and the oil and gas
resources of Plains and McMoRan. The addition of Plains'
established oil production assets and McMoRan natural gas
drilling capabilities and shallow water ultra-deep properties
will provide Freeport a significant exposure to energy
Freeport expects the combined entity to generate operating
cash flows of roughly $9 billion and earnings before interest,
taxes, depreciation, and amortization (EBITDA) of around $12
billion in 2013. Roughly 74% of the combined company's
projected EBITDA is expected to derive from mining with the
balance coming from oil and gas. The company sees significant
synergies from the acquisitions.
Freeport currently holds a short-term Zacks Rank #3
Atlatsa Resources Corporation
), which also belongs to the mining industry, retains a Zacks
Rank #2 (Buy).
ATLATSA RESRCS (ATL): Free Stock Analysis
FREEPT MC COP-B (FCX): Free Stock Analysis
MCMORAN EXPLOR (MMR): Free Stock Analysis
PLAINS EXPL&PRD (PXP): Free Stock Analysis
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