A hedge fund with a 5.1% stake in Phelps Dodge plans to vote against a proposed $25.9 billion takeover of the mining company by Freeport-McMoRan saying the offer does not fairly value Phelps Dodge.
SAC Capital Partners, a hedge fund group led by Steven A. Cohen that has spent $464 million to acquire 10.3 million shares in the Phoenix-based miner, said Monday that Freeport-McMoRan Copper & Gold Inc. and Phelps Dodge Corp. won't fit well together. Phelps Dodge is worth more than Freeport-McMoRan is offering to pay, according to SAC Capital.
CNBC's David Faber says Phelps Dodge's bid for Freeport-McMoRan has turned into a "soap opera." On this morning's Squawk On The Street Faber said, "If you get any other shareholders joining SAC here, it could be a real battle and this deal could get voted down." The merger requires 66% of outstanding Phelps Dodge shares to be voted in favor of the merger.
Under Freeport-McMoRan's offer, each Phelps Dodge share would be exchanged for $88 in cash plus 0.67 of a common share of Freeport-McMoRan.