Why did Southern Copper terminate the support agreement with Frontera Copper?

Southern Copper terminated the agreement because a competing, higher offer from Invecture Group (C$0.75 per share) was made for Frontera, which Frontera's board recommended. Southern Copper determined that increasing its own offer to match or beat the Invecture offer would not be in the best economic interest of Southern Copper shareholders.

What was the value of the proposed acquisition of Frontera by Southern Copper?

The proposed acquisition by Southern Copper was for C$0.65 per share, which represented an aggregate consideration of approximately C$42,000,000 for all of Frontera's outstanding common shares.

What is Southern Copper's strategy moving forward after this termination?

Southern Copper indicated that it remains open to pursuing other business opportunities that are accretive to its shareholders, meaning opportunities that are expected to increase earnings per share or shareholder value.

Did Southern Copper try to outbid Invecture Group?

No, Southern Copper had the right under the support agreement to match the Invecture Offer by increasing its own bid. However, the company chose not to exercise this right, as it deemed an increase in its offer would not be economically beneficial.

SCCO 8-K SEC Disclosure

Summary

Southern Copper Corporation (SCCO) announced on February 18, 2009, that it has terminated its support agreement with Frontera Copper Corporation. This agreement, dated February 4, 2009, had outlined SCCO's offer to acquire all outstanding common shares of Frontera for C$0.65 per share, totaling approximately C$42 million. SCCO's decision to terminate stems from a superior offer made by Invecture Group, S.A. de C.V. on February 6, 2009, for C$0.75 per share. Frontera's board unanimously recommended this higher offer. SCCO chose not to exercise its right to match the Invecture Offer, deeming it not economically in SCCO's best interest to increase its bid. The company remains committed to exploring other value-accretive opportunities.

Key Highlights

1SCCO terminated its support agreement to acquire Frontera Copper Corporation.
2The original offer from SCCO was C$0.65 per share, valuing Frontera at approximately C$42 million.
3A competing offer from Invecture Group at C$0.75 per share was recommended by Frontera's board.
4SCCO chose not to increase its bid to match the Invecture Offer.
5The decision was based on the belief that increasing the offer would not be in SCCO's best economic interest.
6SCCO is actively seeking other acquisition or business opportunities that will benefit its shareholders.

SOUTHERN COPPER CORP/ 8-K Report, Corporate Update (Feb 19, 2009)

Summary

Key Highlights

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