Investment Banks, Hedge Funds, and Private Equity

Freeport-McMoRan

Financing an Acquisition

A November 19, 2006, press release announced Freeport-McMoRan Copper & Gold’s (NYSE: FCX) acquisition of Phelps Dodge, creating the world’s largest publicly traded copper company. FCX chief executive officer Richard Adkerson said, “This acquisition is financially compelling for FCX shareholders, who will benefit from significant cash flow accretion, lower cost of capital, and improved geographic and asset diversification. The new FCX will continue to invest in future growth opportunities with high rates of return and will aggressively seek to reduce debt incurred in the acquisition using the substantial free cash flow generated from the combined business.”¹ The press release went on to note that “FCX ...