Diamonds and Dogs
12/5/12The Diamond and Dog of an acquisition:
Freeport-McMoran Copper & Gold Inc. (FCX)
Freeport-McMoran is not a golden stock today, down 15.99% at $32.16. The exploration and mining company saw its shares crash after news was released that the company was expanding into the energy sector. Freeport said that it would enter the energy sector through a $9 billion purchase of two oil and gas producers. The company said it would purchase the Plains Exploration Co. and McMoran Exploration Co. for $6.9 billion and $2.1 billion, respectively. The addition of the two companies will create a natural resources conglomerate with assets ranging from oil rigs in the Gulf of Mexico to mines in Indonesia. However, Freeport will also assume around $11 billion in debt. Investors feel the cost will outweigh the benefits, thus Freeport is
getting beat up today.
McMoran Exploration Co. (MMR)
McMoran Exploration investors struck gold today, up 87.17% at $15.84. While the buyer in this acquisition is getting crushed today, the company being purchased is exploding higher. Under the terms of the agreement, McMoran Exploration shareholders will be entitled to receive $14.75 per share and would also receive 1.15 units of a royalty trust for each share they hold. McMoran Exploration gained $7.38 today pushing the stock up near its 52-week high of $16.34. Note: Plains Exploration, the other acquisition of Freeport-McMoran is also up 23.50% at $44.52.
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