Last December 5, 2012 Freeport McMoRan Copper & Gold announced that it had acquired Plains Exploration & Production and McMoRan Exploration for US$10.3 billion in cash and stocks. At this price, Plains Exploration would be valued at 73% premium.
This purchase though was done to the chagrin of the company's shareholders, as the negoiations were done in secret. Furthermore, the provision of nearly US$130 million in bonuses for the outgoing executive management was also decried. This resulted in major lawsuits by and between shareholders and management.
The deal pushed the Freeport share prices from US$38 to just US$30 per share before leveling off at US$33. The current drop in worldwide prices of precious metals even dropped the share prices even further, to US$27.24 at Thursday's close.
The original purpose of acquisitions is to reduce risk and diversify its portfolio from a precious metals producer to a mixed commodity market player. One of the new projects is the deep water project in the Gulf of Mexico of Plains Exploration, In contrast to Freeport McMoRan shares, Plains Exploration shares have been appreciating in value.
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