Asarco Accepts Phelps Dodge’s Buyout Offer

Asarco Inc. accepted a sweetened buyout offer from Phelps Dodge Corp., setting up a three-way, $2.9-billion deal that would make Phelps Dodge the world’s largest copper producer.

Cyprus Amax Minerals Co. accepted an offer from Phelps last week, breaking away from a plan to merge with New York-based Asarco.

Asarco and Englewood, Colo.-based Cyprus originally rejected what began as a hostile, stock-only takeover bid for the two companies by Phoenix-based Phelps Dodge.

Phelps Dodge won over the smaller rivals by raising its bid for Cyprus Amax to $1.8 billion and for Asarco to $1.1 billion, and including a total of $1 billion in cash.

The three companies have major copper operations in Arizona, where Phelps Dodge operates the largest copper mine in North America at Morenci near the New Mexico border. The combined company also would have copper operations in Peru, Chile, Mexico and Texas.

In accepting the Phelps Dodge offer, Asarco rejected a higher one from Mexico City-based Grupo Mexico, though the companies each hold a 10% interest in the other.

“From the beginning it has been our aim to maximize shareholder value. We believe this transaction represents good value for Asarco shareholders,” said Francis R. McAllister, Asarco’s chief executive.

The Justice Department’s antitrust division already has signed off on the acquisition, which pushes Phelps beyond Chile’s state-owned Codelco as the world’s largest copper company.

On the New York Stock Exchange, shares of Phelps Dodge fell 56 cents to close at $53, while shares of Asarco rose $1.25 to $28.