The story may not be over, however, as Asarco left the door open for Phelps Dodge to make a higher bid before Oct. 23, the date at which it expects formally to accept the Mexican offer. Asarco must pay Phelps Dodge US$30 million once it terminates their previous merger agreement.
Phelps Dodge has indicated it will not raise its prorated offer of US$28.21 per share and 0.25 share for each share of Asarco. Asarco shareholders would have the option of choosing all cash or all stock. However, Phelps Dodge said much the same thing about raising its bid for Asarco and Cyprus Amax Minerals (cym-n) in September, before Grupo Mexico entered the picture. Eventually, Phelps Dodge increased its bids for both companies, though it was only successful in snagging Cyprus.
The presence of Grupo Mexico’s bid gives Phelps Dodge little choice but to increase its bid if it hopes to complete the original 3-way merger. If completed, Phelps Dodge would save more than US$200 million per year and consolidate many of the copper operations in the southwestern U.S. into one company.
Asarco operates the Mission, Silver Bell and Ray mines in southern Arizona, and owns a 49.9% interest in the Continental mine near Butte, Mont.
It also owns a 54.3% interest in Southern Peru Copper (pcu-n), that country’s largest mining company.
Recently, after discovering new reserves at the Toquepala mine, Southern Peru announced it had received encouraging exploration results from its Los Chancas copper project, 150 km southwest of Cuzco in the department of Apurimac (see separate report, page 3).
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