SAC Sets Sights on Phelps Dodge Buyer

Dec 11 2006 | 10:15am ET

Stamford, Conn.-based hedge fund SAC Capital is hoping to derail Freeport McMoRan Copper & Gold’s proposed $25.9 billion buyout of copper-mining giant Phelps Dodge, according to the New York Post. SAC today, in a Securities and Exchange Commission filing, said it had acquired a 5.1% stake in Phelps Dodge.

According to the Post report, SAC is unhappy with the price offered by Freeport McMoRan when commodity prices are rallying. The spot price of copper on the New York Mercantile Exchange’s New York Commodity Exchange has soared more than 40% since January.

SAC plans to argue that Phoenix, Ariz.-based Phelps Dodge’s position as a world leader in copper is not adequately reflected in New Orleans-based Freeport McMoRan’s offer, which is valued at about $130 per Phelps Dodge share. SAC believes it is worth $150 per share; in early trading on the New York Stock Exchange today, Phelps Dodge shares were fetching about $123.

SAC isn’t going it alone in its foray into activism: It has approached New York-based hedge fund Atticus Capital, which owns about 8.25% of Phelps Dodge, and the Post reports that Atticus is supportive, though it does not want to have a lead role.


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