Freeport-McMoRan Plains Explorations & Production Company
Freeport-McMoRan Copper & Gold Inc. made a major move into oil and gas exploration and production on December 5 by agreeing to acquire Plains Exploration & Production Company and McMoRan Exploration Co. for a total of $8.9 billion in cash and stock. Freeport-McMoRan will also assume $11 billion in debt in the two deals.
Freeport-McMoRan, already the world's largest publicly traded copper company, will pay $6.8 billion for Plains, half in cash and half in stock. At $50 per Plains share, the deal came at a 39 percent premium to the target's closing price on December 4. Plains has aggressively snapped up oil and gas properties in recent years and last fall paid BP p.l.c. $5.55 billion for oil and gas assets in the Gulf of Mexico [Deals & Suits, February].
McMoRan Exploration shareholders will receive $14.75 in cash and 1.15 units in a royalty trust that will hold a 5 percent interest in future production from the target's exploration properties. The cash portion of the offer reflects a 74 percent premium to McMoRan's December 4 closing price. Freeport-McMoRan and Plains already own 36 percent of McMoRan Exploration. The buyer will have to shell out $2.1 billion for the rest of McMoRan Exploration, which Freeport-McMoRan spun out in 1994. The parties hope to close the deal in the second quarter pending approvals from regulators and shareholders of the two target companies. Freeport-McMoRan shareholders do not have a vote on the deal, which angered some of them and helped push the company's stock price down by 16 percent on the day that the deal was announced.
For acquiror Freeport-McMoRan Copper & Gold Inc. (Phoenix)
M&A: Paul Kingsley and Marc Williams. Credit: Lawrence Wieman. (All are in New York.) The firm represented the company in its 2007 acquisition of Phelps Dodge Corporation for $26 billion.
For special committee of Freeport-McMoRan board of directors
Corporate: Gordon Moodie and David Shapiro and associates Eitan Hoenig, Jenna Levine, Zachary Podolsky, and Elina Tetelbaum. Antitrust: Nelson Fitts.Executive compensation and benefits: Jeannemarie O'Brien and associate Adam Kaminsky. Finance: Joshua Feltman and associates Neil Chatani and Austin Witt. Tax: Joshua Holmes. (All are in New York.) Wachtell represented a Freeport-McMoRan special committee in 2010 when the company made an investment in McMoRan Exploration.
For target Plains Exploration & Production Company (Houston)
General counsel John Wombwell and assistant general counsel Carolyn Bertrand and Kimberly Warnica.
Corporate: Michael Dillard, Mark Gerstein, Sean Wheeler, and associates Christopher Little, Adrian Milton, Samuel Rettew, Trenton Roberts, Enoch Varner, Matthew Waldron, and Debbie Yee. Tax: John Clair, Laurence Stein, and associate Jason Choi. Employee benefits and executive compensation: James Barrall, Laurence Seymour, and associates Thomas Asmar and William Kessler.Antitrust: E. Marcellus Williamson and counsel Sydney Smith. Finance: Patrick Shannon and associate Victoria Salem. Litigation: Blair Connelly .Environmental: Joel Mack, Claudia O'Brien, Michael Romey, and associate Davon Collins. Mining-related issues: Christopher Langdon and associates Opeyemi Atawo and Isoken Idemudia. (All are in Houston except for the following: Gerstein is in Chicago; Clair, Stein, Barrall, Seymour, Asmar, Kessler, and Romey are in Los Angeles; Choi is in Singapore; Williamson, Smith, Shannon, and O'Brien are in Washington, D.C.; Salem and the mining lawyers are in London; Connelly and Collins are in New York.) Latham advised Plains in its purchase of the BP assets. Dillard represented the company on its 2002 IPO and numerous other securities law matters.