478

CASE STUDIES

400

70

350

60

300

50

250
40
Copper Spot Price

200
30

FCX Price

150
20

100

10

0
Sep-01
Oct-01
Nov-01
Dec-01
Jan-02
Feb-02
Mar-02
Apr-02
May-02
Jun-02
Jul-02
Aug-02
Sep-02
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Jan-03
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Jun-03
Jul-03
Aug-03
Sep-03
Oct-03
Nov-03
Dec-03
Jan-04
Feb-04
Mar-04
Apr-04
May-04
Jun-04
Jul-04
Aug-04
Sep-04
Oct-04
Nov-04
Dec-04
Jan-05
Feb-05
Mar-05
Apr-05
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Jan-06
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May-06
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Sep-06
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Dec-06

50

FIGURE C3.1 Copper spot price versus FCX stock, September 2001December 2006. Source: NYMEX COMEX data; FCX
historical prices.

would have created the worlds largest nickel producer and largest publicly traded copper
producer. J. Steven Whisler, CEO of Phelps Dodge, made the following proclamation at the
time of the announced merger:
This transaction represents a unique opportunity in a rapidly consolidating industry
to create a global leader based in North Americahome of the worlds deepest and
most liquid capital markets. The combined company has one of the industrys most
exciting portfolios of development projects, and the scale and management expertise
to pursue their development successfully. The creation of this new company gives us
the scale and diversification to manage cyclicality, stabilize earnings, and increase
shareholder returns. At the same time, we are committed to maintaining an
investment-grade credit rating throughout the business cycle.5
The Phelps Dodge announcement came months into Falconbridges implementation of a
poison pill defense in an ongoing attempt to protect itself from a takeover by Swiss
mining giant Xstrata, which had accumulated more than 20% of Falconbridges stock.6
Eventually, the attempted combination between Phelps Dodge, Inco, and Falconbridge
fell apart after Xstrata upped its bid for Falconbridge,7 causing Falconbridges board of
directors to accept this higher bid and reject Phelps Dodge and Inco.8
5

Ibid.

Falconbridge Protects Against Creeping Takeover by Xstrata, Metal Bulletin, September 23, 2005.

Falconbridge Gets $52.50-Per-Share Offer from Xstrata, Stockwatch, May 17, 2006.

Falconbridge Yields to Xstrata, Steel Business Briefing, August 11, 2006.