DealBook: Freeport to Buy Plains Exploration and McMoRan

Muhammad Yamin/ReutersA mine in Indonesia’s Papua province operated by Freeport McMoRan Copper and Gold.

Freeport-McMoRan Copper and Gold said on Wednesday that it would buy two oil and natural gas companies, Plains Exploration and Production and the McMoRan Exploration Company, in a return to the energy business.

The two transactions will create a natural resources titan worth about $60 billion, including debt, and will formally reunite Freeport with McMoRan, the oil exploration company it spun off in 1994.

Under the terms of the deals, Freeport will pay about $6.9 billion in cash and stock for Plains. That offer consists of $25 a share in cash and 0.6531 of a Freeport share, worth about $50 a share based on Tuesday’s closing prices.

Related Links

• Documents: Joint news release

And Freeport will pay $14.75 a share in cash and 1.15 units of a trust that will hold a 5 percent interest in future production of McMoRan’s deepwater exploration operations. Freeport and Plains together already own about 36 percent of the smaller exploration company.

“This transaction will enable us to add assets with exceptional exploration and development potential to a world-class mining company to create a premier minerals and oil and gas business focused on value creation for shareholders,” James R. Moffett, Freeport’s chairman, said in a statement.

JPMorgan Chase is providing $9.5 billion to help pay for the cash portion of the deal and to repay some of Plains’s existing debt.

Freeport was advised by Credit Suisse and the law firm Wachtell, Lipton, Rosen Katz. Plains was advised by Barclays and the law firm Latham Watkins. McMoRan was advised by Evercore Partners and the law firm Weil, Gotshal Manges.

Bryan Walton/Santa Maria Times, via Associated PressA drilling rig operated by Plains Exploration and Production in the Santa Barbara Channel off the California coast in 2007.

Article source: http://dealbook.nytimes.com/2012/12/05/freeport-to-buy-plains-exploration-and-mcmoran/?partner=rss&emc=rss