Broken Hill to Acquire Magma Copper
TUCSON, Ariz. (AP) _ Magma Copper Co. has agreed to be acquired by the Australian conglomerate Broken Hill Proprietary Co. Ltd. in a deal valued at $2.4 billion including assumed debt.
Broken Hill is Australia’s biggest company with interests in steel, minerals and petroleum, and the deal will make it one of the world’s biggest copper producers with broader presence in the United States.
It said Thursday it plans to combine Tucson-based Magma into its existing copper group to be led by J. Burgess Winter, Magma’s president and chief executive.
Under the deal, BHP will begin a $28-a-share cash tender offer for all of Magma’s outstanding shares by Dec. 5. It will acquire at the same price through a merger all Magma shares not purchased in the tender offer.
The purchase price will be $1.8 billion. Broken Hill will also assume Magma’s outstanding debt, making the total value of the deal $2.4 billion, the companies said in a statement.
The merger has already been approved by the Magma board.
``The two organizations have complementary assets, including world class mining and processing capabilities and high quality management skills,″ said Jerry Ellis, chief executive of BHP’s mineral division.
``The joining together of these operations will strengthen the BHP Group and at the same time enhance the company’s position in the copper business,″ he added.
``We can say flatly we don’t foresee any major restructuring of Magma. Clearly, we will be joining business operations in separate locations,″ Broken Hill spokesman Jay Rhodes said.
He said Magma’s Tucson headquarters would remain intact, as would all Magma’s other operations.
BHP is Australia’s largest industrial and natural resources company, with about 52,000 employees in more than 50 countries. Its U.S. operations include coal mining in the Four Corners area as well as oil and gas exploration and production in the Gulf of Mexico and steel processing in Tempe and other domestic locations.
Magma is one of the largest primary copper producers in the Unites States with more than 5,000 employees and mining operations in San Manuel, Miami and Superior and in Nevada and Peru. Magma’s 1994 sales totaled $890 million.
Acquiring Magma will roughly double Broken Hill’s annual production of copper, Rhodes said, to a 1995 estimate of 915,000 tons, compared with estimated 1995 produce of 773,000 tons by Phelps Dodge Corp., the second-largest U.S. copper producer.