Freeport-McMoRan will buy Plains Exploration & Production Co. (NYSE:PXP) for $6.9 billion and McMoRan Exploration Co. (NYSE:MMR) $2.1 billion. The company estimates that after the two deals are completed it will get about 26 percent of its profit from its oil and gas businesses.
Shares of Freeport-McMoRan, which expects the deals to close in the second quarter of next year, plunged nearly 15 percent in late afternoon trading.
"The oil and gas assets being acquired possess the asset quality characteristics that we seek in our mining business – large scale assets with long lives, low cost and geologic potential to support growth through exploration and development," said Richard C. Adkerson, CEO of Freeport-McMoRan.
"We anticipate that attractive debt financing markets and our strong balance sheet will allow us to finance a significant portion of the transaction using low-cost debt and enable FCX shareholders to retain the significant value we see in our existing asset base, while enhancing future value generation opportunities."