Summary
Freeport-McMoRan Copper & Gold Inc. (FCX) announced on December 5, 2012, that it has entered into definitive merger agreements to acquire Plains Exploration & Production Company (PXP) and McMoRan Exploration Company (MMR). The proposed acquisitions represent a significant strategic expansion for FCX, diversifying its operations beyond copper and gold into oil and gas. The PXP acquisition is valued at approximately $6.9 billion in cash and stock, while the MMR acquisition is valued at approximately $3.4 billion in cash (or $2.1 billion after accounting for FCX and PXP's existing ownership in MMR). The MMR transaction also includes a distribution of units in a royalty trust holding a 5% overriding royalty interest on future hydrocarbon production from MMR's Gulf of Mexico properties.
Key Highlights
- 1FCX to acquire Plains Exploration & Production Company (PXP) for $6.9 billion in cash and stock.
- 2FCX to acquire McMoRan Exploration Company (MMR) for $3.4 billion in cash (effectively $2.1 billion net of existing ownership).
- 3The acquisitions mark a significant diversification for FCX into the oil and gas sector.
- 4MMR shareholders will receive a distribution of units in a royalty trust holding a 5% overriding royalty interest on future hydrocarbon production.
- 5Transactions are subject to customary closing conditions and regulatory approvals.
- 6FCX anticipates filing registration statements (Form S-4) and proxy statements/prospectuses for both transactions.