Asarco, Cyprus Likely to Accept Phelps Bid

Asarco Inc. and Cyprus Amax Minerals Co. shareholders are likely to approve a takeover by rival Phelps Dodge Corp., which has offered $2.66 billion in stock to create the world’s top copper producer, analysts said. Phelps’ offer to buy the companies, which had planned their own $2.2-billion merger, offers more opportunities for cost cutting and the chance to own shares in a company with better returns, analysts said. Phelps’ latest bid amounts to a 30% premium over Asarco’s and Cyprus Amax’s closing prices Thursday, when their boards rejected Phelps’ first offer. Phelps sweetened its bid Friday, and some analysts said it could raise it further.

The combination of Phelps Dodge, Asarco and Cyprus Amax would help boost copper prices, which reached a 12-year low in March, by reducing capacity that has created a glut of the metal used to make cars, water pipes and wires. Phelps Dodge shares have almost doubled in value since 1990, while Asarco has fallen about 25% and Cyprus Amax has declined about 35%.

Officials at Englewood, Colo.-based Cyprus Amax and New York-based Asarco didn’t immediately return phone calls seeking comment. Phelps Dodge spokesman Clay Allen said the companies hadn’t yet met to discuss the most recent offer. Asarco and Cyprus Amax shareholders are to meet Sept. 30 to vote on the companies’ planned merger. The companies’ boards haven’t announced when they’ll meet to assess the latest Phelps bid.

On Friday in New York Stock Exchange trading, Asarco shares rose $4 to close at $22.44; Cyprus Amax rose $2.88 to close at $17.38 and Phelps rose 56 cents to close at $59.13.