Copper Companies Tell Phelps Dodge to Up Ante

Cyprus Amax Minerals Co. and Asarco Inc. said Wednesday that they will consider an unsolicited takeover bid from Phelps Dodge Corp. to form the world’s biggest copper producer--if their suitor boosts its all-stock proposal by 29% to $3.32 billion.

Cyprus and Asarco, which had already agreed to merge, Friday rejected a $2.57-billion Phelps Dodge bid. On Wednesday, they asked Phelps Dodge to increase the amount of stock it would pay to 0.53 share for each Asarco share, valued at $30.54, and 0.4055 share for each Cyprus share, or $23.36. Phelps is trying to remain the No. 1 U.S. copper producer, a position threatened by the Cyprus-Asarco deal.

“I think Phelps Dodge will prevail,” said St. James Securities analyst Ray Goldie in Toronto. “Cyprus and Asarco shareholders will . . . say, ‘We’d rather have our assets managed by Phelps Dodge.’ ”

The target companies’ proposal values Cyprus at $2.11 billion, a 36% premium to Wednesday’s closing price. It values Asarco at $1.21 billion, a 42% premium.

In New York Stock Exchange trading, Cyprus shares fell 63 cents to close at $17.19, Asarco fell $1.19 to close at $21.44 and Phelps Dodge declined $2.19 to close at $57.63.