(Updates with comment from analyst, shareholder, share
price.)
By Melodie Warner and Angel Gonzalez
Plains Exploration & Production Co.'s (PXP) board declared a
special dividend of $3 a share, which is conditioned upon the oil
company's completed merger with Freeport-McMoRan Copper & Gold
Inc. (FCX).
The move sweetens the merger for Plains Exploration
shareholders, who are scheduled to vote on the deal on Monday.
Freeport-McMoRan agreed in December to pay the cash-and-stock
equivalent of $50 a share for Plains Exploration, while also
unveiling plans to acquire McMoRan Exploration Co. (MMR) for $3.4
billion in cash.
The dividend is "understandable as pressure had been mounting in
recent weeks to vote against the deal," said analysts with Tudor,
Pickering, Holt & Co.
Freeport-McMoRan's intentions to acquire the two oil explorers
came under fire from investors who say the tie-up is riddled with
conflicts of interest as six directors will have overlapping roles
at Freeport and McMoRan. At the same time, Freeport shares have
declined sharply since the offer was unveiled in December. But
Freeport said earlier this month it wouldn't increase its offer,
ending speculation the deal might be boosted.
Plains on Monday said the special dividend will be paid
immediately prior to the completion of its merger with
Freeport-McMoRan, which has also approved the payout.
Meanwhile, Freeport-McMoRan's board intends to declare a
supplemental $1 dividend immediately following the closing of its
Plains acquisition.
Freeport-McMoRan also said it plans to complete $1.5 billion in
asset sales from the combined company and will reduce its
capital-spending plans.
Paulson & Co. Inc., whose funds own about 9.9% of Plains
shares, said Monday that it "appreciates the flexibility of both
Plains and Freeport in adding incremental cash to the transaction,"
and will vote in favor of the merger.
Plains Exploration shares were trading 6.98% higher at $48.73
while Freeport-McMoRan shares were down 1.32% at $32.25.
Write to Angel Gonzalez at angel.gonzalez@dowjones.com
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