By Saabira Chaudhuri
The chief executive of Plains Exploration & Production Co.
(PXP) urged shareholders to back the company's proposed merger with
Freeport-McMoRan Copper & Gold Inc. (FCX), citing the strategic
nature of the transaction and the scale of the combined company,
among a slew of reasons.
The letter comes as two proxy advisory firms have criticized the
deal, though Freeport-McMoRan said last week it wouldn't increase
its offer for Plains and both companies reiterated their support of
the roughly $6.9 billion cash and stock deal.
Freeport-McMoRan agreed in December to pay the cash-and-stock
equivalent of $50 a share for Plains Exploration while also
unveiling plans to acquire McMoRan Exploration Co. (MMR) for $3.4
billion in cash.
Freeport-McMoRan's intentions to acquire the two oil explorers
came under fire from investors who say the tie-up is riddled with
conflicts of interest as six directors will have overlapping roles
at Freeport and McMoRan. At the same time, Freeport shares have
declined sharply since the offer was unveiled in December. A
special shareholders meeting is scheduled for May 20.
Other reasons to back the deal that Chief Executive James C.
Flores cited in his Monday letter include the financial and
operational strength of the combined businesses and the expected
lower cost of borrowing.
Mr. Flores also criticized analyses provided by proxy advisory
firms Institutional Shareholder Services and Glass Lewis and urged
investors "not to rely on such reports, but on the opinion of
third-party investment banks resulting from months of analysis by
independent financial, engineering and geoscience experts."
Representative of ISS and Glass Lewis didn't immediately respond
to requests for comment.
Shares of Plains closed Friday at $45.04 and were inactive in
recent premarket trading. The stock has risen 15% in the past 12
months.
Write to Saabira Chaudhuri at saabira.chaudhuri@dowjones.com
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