1 Energy Deal to Avoid Right Now

The following video is from Friday's Motley Fool Money roundtable discussion with host Chris Hill and analysts Joe Magyer, James Early, and Ron Gross.

In this segment, Freeport-McMoRan Copper and Gold (NYSE: FCX  ) is buying Plains Exploration (UNKNOWN: PXP.DL2  ) and McMoRan Exploration (NYSE: MMR  ) for $9 billion in cash and stock. Joe discusses why he doesn't like the deal. James makes the case for diversification.

After putting together a blockbuster deal to expand into the oil and natural gas industry, Freeport-McMoRan will have plenty on its plate as it tries to adapt to the new industry, as expanding into oil and gas carries plenty of inherent volatility. FCX had a profitable copper business and, on top of this foray into a new industry, it still has to contend with mining industry bellwether BHP Billiton. To find out if Freeport-McMoRan is a buy or a sell, simply click here now to check out the Motley Fool's brand new premium report on the company!


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  • Report this Comment On December 07, 2012, at 6:37 PM, healthpicker wrote:

    My only real concern here is the FCX boat will sink in to Davy Jones locker!

    I have done some thinking and put myself in the mindset of the Boards involved - executive and independent - and looked at this again.

    BlackRock and others are pissed because it upset their materials portfolio.

    I say "tough tinsle". "Get out there and do something reasonable"

    Look at this from the FCX Board perspective - Adkerson and others.

    Copper and gold set to provide positive cash flow but nowhere logigcal to expand in mining at the moment. Keep all FCX eggs in one basket - Indonesia - I don't think so. Doing nothing was not a good startegy.

    Trend for miners to go back to an old business model but - back to the future comes to mind. BHB and others are doing it.

    Cheap money and the strong FCX balance sheet and future cashflows allows leverage at crazy low rates.

    I cannot believe that this is a pure gamble on Davy Jones.

    If it is then the FCX Board members would rightly be in threat of legal persuit under Fiduciary Juties law. Lawyers are already on that. The shared mixture of Board memebership is an open secret so would they all be party to something illegal - I for one don't think so.

    Some laywers think that the aquired companies shareholders are being screwed - lawyers will always make money whatever happens!

    Here is my view - this is a great time to pick up FXC at $30. I am thinking of liquidating other stock for this once in a life time opportunity.

    I personaly don't think Adkerson has lost his brain. He is only aged 65 and his background was Oil and Gas.

    So BlackRock and others stop throwing a tantrum and get your brains together.

    The big risk and gamble is Davy Jones.

    What do you think?

    Regards

  • Report this Comment On December 09, 2012, at 6:37 PM, SeminoleJet wrote:

    I WOULD LIKE TO KNOW HOW MANY CALLS MF HAS OR WILL BE BUYING FCX JAN 40 CALLS.

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