By Phil Milford
Freeport-McMoRan Copper & Gold Inc.’s $6.9 billion bid for Plains Exploration & Production Co. is inadequate and should be blocked, an investor’s lawyer told a Delaware judge, who delayed a decision.
Plains directors failed in their duty to get the best price for the company’s stock, according to shareholders who sued in Delaware Chancery Court. At a hearing today, plaintiff’s lawyer Peter B. Andrews asked Judge John Noble to issue a preliminary injunction to halt the deal, contending information is lacking.
“If I issued an order today” temporarily halting the buyout process pending additional disclosure “could it be done quickly,” in time for a late May vote, Noble asked Plains lawyer Blair Connelly.
He indicated it could and Noble told the parties not to “read too much” into his remark. Noble said he’d render a decision next week.
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Plains shareholders can’t make an informed decision on whether to accept the buyout because company officials haven’t revealed basic financial figures such as cash flows, Andrews told Noble.
The board is experienced and knew what it was doing, Connelly countered. “We’re not talking about a bunch of know- nothing pushovers,” he said.
“This case is about a premium transaction” that “stockholders are fully empowered to reject,” defendants’ lawyer, Lisa Schmidt, wrote in an April 19 brief. “No bidder has come forward to offer the stockholders anything better” and a vote on the deal should be allowed, she said
Opponents said the deal “is riddled with disabling conflicts of interest.” Plains Chief Executive Officer and Chairman James C. Flores stands to collect more than $140 million in shares and tax payments once the company changes hands, according to the investor complaint.
A hearing on a related case, in which shareholders sued McMoRan Exploration Co., was postponed.
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Freeport, based in Phoenix, said in a statement Dec. 5 that it would buy Houston-based Plains for $25 in cash and 0.6531 Freeport share for each Plains share; and would buy New Orleans- based McMoRan for $14.75 a share and 1.15 units of a royalty trust.
The deal, amid “unsettled markets,” is “part of a complex repositioning as an energy powerhouse” for Freeport- McMoRan, company lawyer William D. Savitt told the judge. He said there was “substantial risk of harm” if the transactions are delayed.
The cases are Rice v. Plains, CA8090, and Krieger v. McMoRan, CA8091, Delaware Chancery Court (Wilmington).