Plains Exploration CEO urges shareholders to back Freeport-McMoRan merger
BY SAABIRA CHAUDHURI
HOUSTON -- The CEO of Plains Exploration & Production urged shareholders to back the company's proposed merger with Freeport-McMoRan Copper & Gold, citing the strategic nature of the transaction and the scale of the combined company, among a slew of reasons.
The letter comes as two proxy advisory firms have criticized the deal, though Freeport-McMoRan said last week it wouldn't increase its offer for Plains and both companies reiterated their support of the roughly $6.9 billion cash and stock deal.
Freeport-McMoRan agreed in December to pay the cash and stock equivalent of $50 a share for Plains Exploration while also unveiling plans to acquire McMoRan Exploration for $3.4 billion in cash.
Freeport-McMoRan's intentions to acquire the two oil explorers came under fire from investors who say the tie-up is riddled with conflicts of interest as six directors will have overlapping roles at Freeport and McMoRan. At the same time, Freeport shares have declined sharply since the offer was unveiled in December. A special shareholders meeting is scheduled at the end of May.
Other reasons to back the deal that CEO James C. Flores cited in his letter include the financial and operational strength of the combined businesses and the expected lower cost of borrowing.
Mr. Flores also criticized analyses provided by proxy advisory firms Institutional Shareholder Services (ISS) and Glass Lewis and urged investors "not to rely on such reports, but on the opinion of third party investment banks resulting from months of analysis by independent financial, engineering and geosciences experts."
Representative of ISS and Glass Lewis didn't immediately respond to requests for comment.
Dow Jones Newswires