FTC Clears Freeport Takeover of Phelps
The Federal Trade Commission approved the $25.9 billion takeover of copper miner Phelps Dodge by Freeport-McMoran Copper & Gold, according to a notice posted on the agency's Web site.
FTC clearance removes at least one obstacle to the proposed combination, which would create the world's largest copper miner. The deal still needs shareholder approval, and there is no certainty the companies will get it.
Earlier this month, a hedge fund with a 5.1 percent stake in Phelps Dodge said it would throw the weight of its 10.3 million shares against the takeover. SAC Capital Partners opposes the combination, saying that the cash-and-stock offer doesn't fairly value Phelps Dodge.
Since the deal was first announced in late November, Prudential analyst John C. Tumazos has said he expected to see additional bids emerge for Phelps Dodge. But that was when copper was trading at about $3.05 a pound on the spot market.
The price has since fallen to about $2.85 per pound -- down 18 cents from the date the companies decided to combine and down 67 cents from the third-quarter average.
"We estimate the odds of a higher bid drop about 1% with each penny that copper falls," Tumazos wrote in a recent note to clients.
The FTC granted early termination of a mandatory antitrust waiting period on Dec. 22.