Phelps Dodge acquired for $26 billion

On 14 March 2007, Phelps Dodge Corporation (NYSE:PD) was acquired by Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) to form the world's largest copper mining company. The purchase price was $26 billion. Now that is a whole lot of pennies. $6 billion of the purchase price stems from bonds issued by FCX. Phelps Dodge shareholders will receive $88 in cash for each share of PD common stock, plus 0.67 of a share of FCX's common stock for each share of PD common stock. PD shareholders will pocket a total of $18 billion in cash. This works out to $125.53 per share of PD common stock. Shares of PD closed at $127.93 on 15 March 2007, up $2.22 per share. For its part, FCX shareholders authorized an increase in the number of shares of FCX common stock available from 423.6 million to 700 million.

Phelps Dodge has been on a tear lately reporting 4Q 2006 record net income of $1,324.3 million, or $6.50 per share for the quarter. Compare that figure to 4Q 2005 net income of $121.3 million, or 60 cents per share. 4Q 2006 price of copper per pound averaged $3.19 on the New York Commodity Exchange, compared to $2.02 for 4Q 2005.

Total 2006 net income exceeded $3 billion, bouyed in part by strong prices for copper and molybdenum, as well as by new mining operations at the Cerro Verde mine in Peru, the Safford mine in Arizone, and the Tenke Fungurume in the Democratic Republic of the Congo.