Phelps Dodge to sell for $25.9 billion

By Walter Mares, Copper Era Managing Editor
Published on Tuesday, November 21, 2006 10:23 AM MST

A monumental event is about to occur in the copper industry. Copper giant Phelps Dodge will be acquired by Freeport-McMoRan Copper & Gold, or FCX, to create the world’s largest publicly traded copper company. It will also be the largest North American-based mining company.

Phelps Dodge said in a Sunday news release FCX will acquire PD for approximately $25.9 billion in cash and stock. The transaction is expected to close in the first quarter of 2007.

The Phelps dodge and FCX boards of directors each unanimously approved the terms of agreement and have recommended their shareholders approve the transaction. The deal is subject to approval of both company’s shareholders, regulatory approvals and customary closing conditions.

Phelps Dodge, which employs 15,000 people worldwide, is Arizona’s and the nation’s largest copper producer. It is also one of the world’s largest copper producers. Its flagship mine at Morenci has greatly increased production throughout 2006 as copper prices remain at or close to all-time highs.

PD is also in the process of developing another copper mine near Safford. The copper giant also has operations in Globe-Miami.

It employs about 5,500 people in Arizona, of which 2,500 work at the Morenci mine. The company has an estimated $2.6 million impact on Arizona’s economy.

Kimball Hansen, Phelps Dodge communications director, said plans for the Safford mine will continue uninterrupted.

“It is an important part of the company's resource portfolio, and we look forward to producing copper starting in mid-2008,” Hansen said. The combined company’s copper production growth is expected to be about 25 percent over the next three years.

A building boom and overall economic growth in China have been at the heart of increased demand for copper. Industry analysts have not forecast any decline in China’s economy in the immediate future.

Stock shares

Under the terms of the transaction, FCX will acquire all of the outstanding common shares of Phelps Dodge for a combination of cash and common shares of FCX for a total consideration of $126.46 per Phelps Dodge share. Each P-D shareholder would receive $88 per share in cash, plus .067 common shares of FCX. That represents a premium of 33 percent to Phelps Dodge’s Nov. 17 closing price and 29 percent to its one-month average price at that date.

The cash portion of $8 billion represents approximately 70 percent of the total consideration. FCX would in addition deliver a total of 137 million shared to Phelps Dodge shareholders. That would result in P-D shareholders owning about 38 percent of the combined company on a fully diluted basis.

J. Steven Whisler, Phelps Dodge chairman and chief executive officer, said, “This transaction provides Phelps Dodge shareholders a significant premium for their shares and gives them the opportunity to participate in the upside potential of a geographically diversified industry leaders possessing the scale and asset quality to compete on the global stage successfully.”

He added, “I believe our management team, with its industry-recognized reputation for operational excellence and technological innovation, possesses the skills in open pit and underground mining and mineral processing to add value to FCX operations. We look forward to working with FCX to realize all of the benefits of this combination, and its exciting portfolio of growth and expansion projects, for our shareholders, customers, employees and suppliers.”

Long haul

Phelps Dodge is observing its 125th year in mining, which began in Clifton-Morenci. The company also has operations in Colorado and New Mexico in addition to South America and Africa.

FCX presently operates the world-class Grasberg mine in Papua, Indonesia, which is the world’s largest copper and gold mine in terms of reserves. It smelts and refines copper concentrates in Spain and Indonesia.

The news release said the combined company of P-D and FCX will represent one of the most geographically diversified portfolios of operating, expansion and growth projects in the copper mining industry. The company’s increased scale of operations, management depth and strengthened cash flow is expected to provide an improved platform to capitalize on growth opportunities in the global market.

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Comments

14 comment(s)

Genevieve wrote on Oct 22, 2009 7:59 PM:

" I visited this spot in 2001 and had a wonderful time, in the two weeks I was there I greatly enjoyed the spring, the people and hiking in the surrounding area. The time I spent here was the highlight of my winter adventure. I played dominoes, drank tequila and picked up pretty rocks (and soaked in the spring of course!) It sounds like some terrible things have happened since and it's a shame that it's now closed. I would have loved to have seen it again. "

Tricia Wenzl wrote on Sep 20, 2008 4:32 PM:

" Re: Eve Batchelder murder-2006. I personally knew Eve as did many of my other co-workers and we were appalled that her confessed murderer was allowed to plead to a lesser charge (obviously) to escape the death penalty. This was a pre-meditated murder and kidnapping, resulting in the death of a wonderful, gentle soul not to mention leaving her two children without their mother! Jason Martinez does not deserve to live at the expense of the taxpayers with the chance that he could be paroled! Society cannot afford to be "soft" for the fear of peer pressure. "

ciara wrote on Jul 17, 2008 9:06 PM:

" hi i would like to know what time the pool opens "

Warnar Moll Amsterdam The Netherlands wrote on Jul 14, 2008 11:20 AM:

" I agree with Rustom Kevala.
In literature there are many scientific indications that the preparation of the sacred liquid (Haoma),could not contain a Hallucinogen-Entheogen drug (cf publications of Harry Falk, Jan Houben, Frits Staal and the late Mary Boyce).
As a plant-physiologist and toxicologian, I did some study about the preparation of Parahom (as described in Avesta). From the scientic point of view it is impossible that the sacred drink is hallucinogen.
I do not understand the arguments of the Pima's Church of Cognizance.
It is as stupid as the assert: Jesus used Marihuana. "

tom wrote on Apr 19, 2008 3:15 PM:

" if having someone go through something like especially a child is not an invasion of privacy then nothing is but then thats the 9th circus for you "

F THE SYSTEM!!! wrote on Feb 14, 2008 9:15 AM:

" Who cares about ibuprofen anyways! its just a pill that peopel take for headaches and aches who cares about what the school system. If someone suffers from chronic headaches and stuff like that they should be allowed to carry it around. IT was a bad thing to distribute it around to others, but they should be able to keep it anyway. Its not like teachers are all that willing to let students out of the classroom just because of a headache!!! SMS should be sued. Strip searching a student like that should NOT BE ALLOWED!!!! "

LaVae McClellan wrote on Feb 5, 2008 1:51 PM:

" Eric and Kevin Yazzie are my brothers, they always will be. Yeah its true they had a history of fighting, but thats all u see. The Eric and Kevin i know are happy and fun loving, make everybody laugh. I miss kevin, but theres nothing we can do for him now. As for Eric they need to let my brother go already "

joe tapia wrote on Dec 9, 2007 8:05 PM:

" I have spent half of my life in this canyon along with my cusion juan luepke and I would like to know what threats to the public that our gate is causing. there is another way into the canyon then through our property. Just before you get to the cobra guest ranch on klondyke rd take the tully springs\old aravaipa town turn follow for about 4 miles there is a side road just after the second cattle guard the road turns east you have to open a few gates but there not locked. "

JOE TAPIA wrote on Dec 9, 2007 12:11 AM:

" THE ROAD THAT EVERY ONE HAS USED FOR THE LAST 20-30 YEARS, Is owned by my family. as I have been told to me by my father that the b.l.m and nature conseverency asked to use our road because their easement down by the river kept getting washed out by floods.So when norma put the gate up the b.l.m asked the conservency to redo the road by the river again conservency said no way. By,joe tapia "

Katelynn Nichols wrote on Dec 7, 2007 5:34 PM:

" Clifford Bea Fowler is My uncle ans my cousin Kelci's dad he may be a white supremeist but he still loves his daughter.But he should be held responsible for his actions. "

Stephen wrote on Nov 30, 2007 8:57 AM:

" My thoughts and prayer's go out to the late Bobby Bell's family. "

SMSmom wrote on Nov 9, 2007 12:11 PM:

" I will be notified if my child is in so much trouble that he may need to be stripped searched. "Depending on circumstances"--NO I WILL BE NOTIFIED!!! TRY ME!!! "

Keisha wrote on Oct 27, 2007 8:03 PM:

" I'm sure if these guys were a threat to society action would of been taken. I'm not condoning such behavior but Linda sounds like she's up to no good. "

linda wrote on Oct 26, 2007 11:59 AM:

" Is there any way to post the photos of these molesters "in" the schools so that the children and school staff may detect any possible molesters? After all they are the ones who would most likely see them. "

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