Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) noted on Wednesday that had inked a deal to buy two oil and natural gas companies. The buys, which will allow Freeport to own The McMoRan Exploration Company and Plains Exploration, will mark Freeport’s comeback to the energy business.
The most notable highlight in the deal is the fact that it will reunite Freeport with McMoRan, an oil exploration company that the former spun off close to two decades ago in 1994. At the wake of the deal, Freeport will tower above many natural resources heavyweights as it will attain a lumpy worth of about $60 billion, including debt.
Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX), which received counsel from the law firm Watchel, Lipton, Rosen &Katz and Credit Suisse, will be compelled to pay an estimated $6.9 billion in cash and stock for Plains. This offer is inclusive of $25 a share in cash and a 65.31 percentage of a Freeport share, which in essence translates to 0.6531 of the $50 a share at the end of trading on Tuesday.
Moving over to McMoRan, Freeport will have to fork out $14.75 a share in cash to facilitate the reunion. In addition, it will have to part with 1.15 units of trust that will secure a 5 percent interest in the succeeding production of McMoRan’s deep water exploration operations. McMoRan received counsel from the law firm Weil, Gotshal & Manges alongside Evercore Partners.
Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) will hope to get something good from these deals following its lackluster performance in the third quarter that saw its earnings dip from $1.1 billion last year to $824 million.
JPMorgan’s involvement in the deal
JPMorgan Chase & Co. (NYSE:JPM) is chipping in financially to assist in paying the cash portion of the deal. JPMorgan’s assistance, which amounts to $9.5 billion, will also help in settling some of Plain’s current debt. The bank’s involvement in this deal signals its efforts to create value for its shareholders, who have for the past several months grilled the management over the infamous London Whale trading losses that went viral mid this year.