Friday, April 20, 2012

Is Freeport a takeover target?

Phoenix-based Freeport McMoRan Copper & Gold is being talked about as a possible takeover candidate by financial analysts.  A review on quotes one hedge fund analyst as saying "Freeport has probably the most attractive assets in the world with its [Grasberg] copper mine in Indonesia."  The company had a market capitalization of $35 billion earlier this week, but a takeover price is speculated to be over $45 billion, assuming a 30% premium.

The article said "Freeport, the world's largest publicly traded copper miner, was valued at 3.3 times its earnings before interest, taxes, depreciation and amortization in 2013," which they say is about a third less than the median for large copper producers.

Possible buyers would be limited - suggestions include Rio Tinto, BHP, and Anglo-American.   

Since it's peak price in January 2011, Freeport's stock price has dropped 39% following a workers strike at the Grasberg Indonesia mine, and weakening demand for copper by China.

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