| NEW YORK, March 19
NEW YORK, March 19 Freeport-McMoRan Copper &
Gold Inc. (FCX.N) on Monday completed its $25.9 billion
acquisition of Phelps Dodge Corp. PD.N -- one of the most
famous names in U.S. mining history -- to form the world's
largest publicly traded copper company.
It immediately commenced public offerings of about 35
million common shares and 10 million shares of mandatory
convertible preferred stock to help repay debt incurred in
connection with the deal.
Bear Stearns meanwhile raised its investment rating of
Freeport, saying the acquisition of Phelps Dodge will
increase Freeport shareholders' earnings straight away.
Announcing completion of the deal, Freeport Chief Executive
Officer Richard Adkerson said the new company -- to be known as
Freeport-McMoRan Copper & Gold Inc. -- will have large,
long-lived, geographically diverse assets and significant
proven and probable reserves of copper, gold and molybdenum.
Freeport, whose only major project up to now has been the
vast Grasberg gold mine in Indonesia, acquires Phelps' mines in
South America and the U.S. Southwest, as well as the rich Tenke
Fungurume copper and cobalt project in Democratic Congo.
"These assets will deliver significant copper volumes to an
attractive market place, providing substantial cash flows that
will enable us to invest in growth projects and reduce debt
rapidly," Adkerson said.
Freeport is moving its corporate headquarters from New
Orleans to Phoenix, Arizona, closer to Phelps' U.S. copper
mines. With the acquisition, it marks the end of a name that
had done business in America since before the Civil War.
Phelps Dodge began life in 1834 as a New York City-based
mercantile company, trading American products to England in
exchange for copper, iron, tin and other metals. The name came
from founding partners Anson Phelps, a one-time saddle maker,
and his son-in-law, William Dodge, a merchant in dry goods.
Their company entered mining in 1881 when it invested in
the Detroit Copper Mining Co. in Morenci, Arizona, quitting the
import-export business altogether in 1906.
With Monday's acquisition by Freeport McMoRan, Phelps CEO
and Chairman Steven Whisler will retire after more than 30
years with the company, as will CFO Ramiro Peru.
James Moffett will continue as chairman of Freeport with
Adkerson as CEO. Timothy Snider, president and chief operating
officer at Phelps Dodge, has been named to the same positions
at Freeport and Freeport Chief Financial Officer Kathleen Quirk
continues as CFO and treasurer of the combined company.
In a research note, Bear Stearns raised Freeport's
investment rating to "outperform" from "peer perform," noting
Phelps' shareholders get a 32-percent premium on their shares
from prior to the announcement of the deal last November.
The brokerage, which has a price target of $80 on the
stock, said the company's shares represent a compelling value
given the diverse asset base, strong management team and
attractive growth prospects.
In early afternoon trading on the New York Stock Exchange
on Monday, Freeport shares were up 40 cents at $61.11. Phelps'
stock, on its last day of trading, was up 43 cents at $128.93.
Bear Stearns also increased its 2007 copper price forecast
to $2.60 per pound COMEX spot from $2.40. It also raised its
2008 copper price forecast to $2.20 per pound from $2.00.
Freeport announced a public offering of about 35 million
common shares and also an offering of 10 million shares of
mandatory convertible preferred stock for $100.00 per share.
The company said it plans to use the net proceeds from
these offerings to repay debt incurred in connection with the
acquisition of Phelps Dodge.