Freeport Mcmoran Case Study

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1. Introduction Freeport-McMoRan also called Freeport or FCX in New York Stock Exchange, operates in exploration, mining and refining of ore containing copper, gold and silver. Freeport’s synergy in creating the world’s largest publicly traded natural resources was initiated through the merger and acquisition (M&A) transactions. Investment banks, J.P. Morgan and Merrill Lynch play a key role as a financial assistance to advice Freeport in the merger and acquisition transactions. On November 19, 2006, media announced that Phelps Dodge (PD) is to be acquired by Freeport. This opportunity will eventually benefit Freeport in the future growth, given that PD is known as world’s leading producer of molybdenum-based chemicals and…show more content…
of outstanding shares) + (short-term debt + long-term debt + capitalized leases + preferred stock - cash on hand) = ($119.72 x 203.5 million) + $(33.7 + 770.1 + 0 + 0 - 4947.4) million = $20.2 billion * EV/Sales = ($20.2/$11.91) billion = 1.7 * ROE = Net income/shareholder’s equity = $3017.8/$7690.4 = 39.24% Theoretically, with the results of the P / E multiples, the company's value or performance can be determined by multiplying the company's profit with this ratio upon the target company. Phelps’s P/E multiples have increased from the previous quarter in which attract companies’ attention for acquisition. Higher P/E means PD use stock as consideration more frequently. In addition to positive EV/Sales, it shows that Phelps has more debt rather than cash. However, the growth of Phelps’ P/E targets a good prospect in future earnings. For ROE, as higher the return is better so, with this ROE, FCX can use it to compare the other companies. 3. Question 2 c. Along the M&A activity centered around Freeport, J.P. Morgan and Merrill Lynch were involved in nearly all acquisition processes up to capital raising. Each of investment banks has coverage, M&A and capital market teams, sit as a financial assistance and responsible for all of the due diligence and valuation work. Looking more closely, the metal and mining industry coverage
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