With copper prices sliding faster in December than a sled in a snowstorm, it nevertheless appears likely that the proposed takeover of Phelps Dodge (NYSE:PD) by Freeport-McMoRan Copper & Gold (NYSE:FCX) actually will occur. However, the deal, which was announced last month and yesterday gained regulatory approval, still may face at least one hurdle in the form of a challenge from a major institutional holder of Phelps shares.

By way of refresher, about a month ago, New Orleans-based Freeport announced a $26.3 billion -- $129.07 per share -- offer for the outstanding shares of the larger, Arizona-based Phelps. The offer represented about a 35% premium to Phelps Dodge's share price before the announcement. At the time, however, it was thought by some observers that other potential acquirers might well weigh in with offers of their own.

Mentioned prominently was Australia's BHP Billiton (NYSE:BHP), a diversified mining and energy behemoth, with interests in base metals, aluminum, carbon steel, energy coal, and oil and gas. Also discussed as a possible acquirer of Phelps, Freeport, or both was Southern Copper (NYSE:PCU), which is controlled by Grupo Mexico. But to this point, none of these potential suitors has arrived at the dance.

What has occurred, however, especially this month, is a substantial decline in the price of copper. Prices for the base metal, which had reached a record $4.04 a pound on May 11, slid last week to a March delivery level of $2.86. There are a couple of reasons for the decline, the first being the sharp drop in the U.S. housing and automotive sectors, which together are responsible for about half the nation's copper consumption. That phenomenon alone has raised inventories materially and has resulted in predictions that prices could dip to $2 in 2007. At the same time, threatened strikes in some copper-producing areas of Chile have failed to materialize, thereby deflating somewhat the speculative balloon that had helped to buoy world prices.

Against that backdrop, the deal ran into some potential static earlier this month when giant hedge fund SAC Capital, which owns 5.1% of Phelps, said that it was dissatisfied with the level of Freeport's offer and would seek $150 per share before it voted for the transaction. But with Phelps' share price still well below the level of Freeport's offer, SAC's approach doesn't seem to have legs.

Finally, on Tuesday, Freeport CEO Richard Adkerson received a somewhat belated holiday present when U.S. antitrust authorities approved his proposed combination. Even in the face of both the metal's declining prices and SAC's stand, it appears that the combination will be consummated and a copper-producing giant will result. However, insofar as copper prices are unlikely to right themselves for at least the next several months, my advice to Foolish investors is to await clear signs of at least a U.S. housing recovery before putting their pennies into the new copper combo.

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Fool contributor David Lee Smith does not own any of the companies mentioned. He welcomes your questions or comments. The Fool has a disclosure policy.