Freeport-McMoRan Copper & Gold Inc.
) said that its proposed takeover of
Plains Exploration & Production Company
) has been cleared by the latter's shareholders at a special
meeting. Shareholders holding the majority of Plains outstanding
shares approved the deal. The transaction is expected to close on
Freeport, in late 2012, landed definitive merger pacts to buy
independent oil and gas company Plains and exploration and
McMoRan Exploration Co.
) for roughly $9 billion. The move represents a part of the
company's strategy to diversify from its bread-and-butter copper
Under the merger agreement, Plains shareholders were given an
option to receive either cash or shares of Freeport common stock
for each share they held in Plains, with value equal to the sum
of 0.6531 Freeport shares and $25. Freeport is expected to pay
roughly $6.9 billion in cash to buy Plains.
Following the approval of the transaction by shareholders,
Freeport and Plains announced final allocation of the merger
consideration. Based on the expected closing date and the
proration formula set in the merger pact, shareholders of Plains
who elected to receive Freeport shares will get shares at an
exchange ratio of roughly 1.4302 shares of Freeport stock for
each Plains share.
Moreover, Plains shareholders who elected to receive cash will
get $46.01 in cash for each share they held in Plains. Lastly,
shareholders who did not make a valid election or did not deliver
a valid election form before the election deadline will get
around 99.5% of their merger consideration in cash (equal to
$46.01 for each Plains share and the balance of their
consideration in Freeport shares at an exchange ratio of roughly
1.4302 shares of Freeport stock for each Plains share).
For the McMoRan acquisition, Freeport is paying $14.75 per share
in cash. 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 Plains).
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. Shareholders of McMoRan will vote on the
proposed acquisition at a special shareholders' meeting on June
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 markets.
Freeport currently holds a short-term Zacks Rank #3 (Hold).
Sibanye Gold Limited
), which also belongs to the mining industry, retains a Zacks
Rank #1(Strong Buy).
FREEPT MC COP-B (FCX): Free Stock Analysis
MCMORAN EXPLOR (MMR): Free Stock Analysis
PLAINS EXPL&PRD (PXP): Free Stock Analysis
SIBANYE GLD-ADR (SBGL): Get Free Report
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