Business Headlines
Friday August 20 12:40 PM ET
Phelps Dodge Offers To Buy Asarco, Cyprus
By Patricia Vowinkel
NEW YORK (Reuters) - Phelps Dodge Corp (NYSE:PD - news), the No. 1 U.S. copper
producer, made a $2.56 billion unsolicited stock offer to buy Asarco Inc. and Cyprus Amax
Minerals Co. (NYSE:CYM - news), two rivals that are planning their own merger, Asarco and Cyprus said Friday.
The Phelps Dodge bid comes just a month after New York-based Asarco and Denver-based Cyprus agreed to a
combination that would create the world's largest publicly traded copper company.
The two companies rejected the Phelps Dodge bid. They said it contained ``a number of contingencies,' but did not explain
in a statement. Phelps Dodge declined immediate comment.
Phelps Dodge's bid for Asarco and Cyprus is the latest wave in a consolidation sweeping the commodities industry. The
proposal comes a day after Reynolds Metals Co. (NYSE:RLM - news) agreed to be bought by Alcoa Inc., the world's top
aluminum producer, for $4.3 billion in stock.
The development sent the shares of all three copper companies higher. Phelps Dodge jumped 2-3/16 to 60-3/4 on the New
York Stock Exchange Friday afternoon. Asarco gained 2-9/16 to 21 on the NYSE, and Cyprus added 1-15/16 to 16-7/16
on the NYSE.
On COMEX, copper futures prices jumped initially, but eased quickly.
The offer values Asarco at about $22 a share, some 19 percent higher than Thursday's close of 18-7/16 on the NYSE.
Cyprus Amax is valued at about $16.83 a share, about 16 percent above the Thursday close of 14-1/2 on the NYSE.
With about 40 million shares outstanding, the offer valued Asarco at about $873.4 million. Cyprus Amax was valued at
about $1.69 billion, with about 101 million diluted shares out.
Asarco and Cyprus said Phoenix-based Phelps Dodge proposed an exchange of 0.3756 of a share for each Asarco share,
and 0.2874 of a share for each Cyprus Amax share.
Asarco and Cyprus said their boards of directors met on Aug. 19 to consider the offer from Phelps Dodge, and decided it
was in the best interests of their stockholders to pursue their own merger instead.
Asarco and Cyprus set shareholder meetings for Sept. 30 to approve their merger.
The companies said under their merger annual expenses would be reduced by nearly $200 million, including $50 million in
administrative and overhead costs; $50 million in purchased materials and services costs; $25 million in other costs; and $75
million in lower depreciation.
As part of the cost cuts, Cyprus Amax's Denver office will be closed, and Asarco's New York office will be downsized and
moved to New Jersey.
Earlier Stories
Asarco, Cyprus Get Phelps Dodge Proposal (August 20) |
