Not All Acquisitions Go as Planned


Freeport-McMoRan announced that it would be spending $9 billion to acquire Plains Exploration & Production , along with McMoRan Exploration last December. Neither deal has closed, and the subsequent drop in Freeport's stock price has left many Plains investors wondering if the original deal is sweet enough.

A vote on Monday will decide the near-term fate of these two companies. It is unlikely that Freeport will boost its offer, but it seems that Plains would need to be part of the deal for it to make sense to Freeport. McMoRan Exploration is the more risky of the two due to the unclear future of its Davy Jones well in the Gulf of Mexico. The deal makes sense from a diversification standpoint, but is it worth added capital?

After putting together a blockbuster deal to expand into the oil and natural gas industry, Freeport-McMoRan will have plenty on its plate as it tries to adapt to the new industry, as expanding into oil and gas carries plenty of inherent volatility. FCX had a profitable copper business, and on top of this foray into a new industry, it still has to contend with mining industry bellwether BHP Billiton. To help investors determine if Freeport-McMoRan is a buy or a sell, The Motley Fool has compiled a premium research report on the company. Simply click here now to access your copy today.

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Joel South has no position in any stocks mentioned. Taylor Muckerman has no position in any stocks mentioned. The Motley Fool owns shares of Freeport-McMoRan Copper & Gold. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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