Evy Hambro, manager of BlackRock Inc. (BLK:US)’s $12 billion World Mining Fund, questioned Freeport- McMoRan Copper & Gold Inc.’s rationale for buying two oil and gas companies and said investors should get to vote on the deals.
Freeport, the largest publicly traded copper producer, said today it agreed to acquire Plains Exploration & Production Co. (PXP:US) and McMoRan Exploration Co. (MMR:US) for about $9 billion to diversify into energy by adding oil fields in the Gulf of Mexico.
The amount of Freeport stock used as payment isn’t sufficient to require a vote by shareholders, Chief Executive Officer Richard Adkerson said on a conference call hosted by the Phoenix-based company. A vote would be “fair,” Hambro said on the call. BlackRock held at least 3.1 percent of Freeport on Sept. 30, according to data compiled by Bloomberg.
“Congratulations on making one of the worst teleconferences I’ve ever heard to justify a deal,” Hambro said. “I haven’t heard anything on this call that in any way justifies why these companies should be put together.”
Freeport slumped (FCX:US) 16 percent to $32.16 at the close in New York, the biggest decline since Dec. 3, 2008.
“I hope you’re not going to be jumping to conclusions too quick and look at the history of why we’ve been successful in the past,” Freeport Chairman Jim Bob Moffett said on the call in response to Hambro’s comments.
The Plains and McMoRan deals mark Freeport’s return to energy after 18 years. McMoRan was spun off from Freeport- McMoRan Inc. in 1994.
Investors have the freedom to diversify their own portfolios “and don’t need management teams to do it for them,” Hambro said. It’s “incredibly disappointing that as a management team you’ve chosen to break the trust with investors from the business that we chose to invest in.”
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