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CR Intrinsic says it will vote against Freeport energy deal
May 6, 2013 / 4:45 PM / 4 years ago

CR Intrinsic says it will vote against Freeport energy deal

May 6 (Reuters) - CR Intrinsic said on Monday it plans to vote against Freeport McMoRan Copper & Gold Inc’s acquisition of Plains Exploration & Production Company because it undervalues the oil and gas company.

The acquisition is part of Freeport’s big bet on the energy industry, a deal to acquire both Plains and the related McMoRan Exploration Co announced in December.

“Based on our analysis, (Plains) shares would be trading higher than the current market price absent the proposed transaction,” CR Intrinsic, a unit of hedge fund SAC Capital Advisors, said in a letter to Plains’ board.

The letter said shares of Plains’ peers have risen since the deal was announced, and Plains has also “reported two operationally strong quarters.” CR Intrinsic said its affiliates and funds it manages own about 3.8 percent of the company.

Falling metal prices have weighed on Freeport’s stock, dragging down the value of its offer for Plains, which is $25 in cash and 0.6531 shares of Freeport per share. As of Friday’s close, that was equivalent to $45.33 per share, down from $50 when the deal was announced.

The deal prompted a flurry of lawsuits accusing Freeport and its directors of both underpaying and overpaying to get into the energy business. Freeport’s stock dropped when it was announced, with some critics arguing that the venture was a pricey and unnecessary distraction from its core copper business.

But the miner’s shareholders will not have an opportunity to vote on the deal, while Plains’ investors will vote at a May 20 special meeting.

Shares of Plains rose 1 percent to $46 on the New York Stock Exchange.

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