SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[X] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
Asarco Incorporated
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Phelps Dodge Corporation
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] $125 per Exchange Act Rules O-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how it was
determined):
--------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------
5) Total fee paid:
--------------------------------------------------------------------
[ ] Fee paid previously by written preliminary materials
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1) Amount Previously Paid:_________________________________________
2) Form, Schedule or Registration Statement No.:-__________________
3) Filing Party:___________________________________________________
4) Date Filed:_____________________________________________________
Notes:
<PAGE>
FOR IMMEDIATE RELEASE
Contacts:
Investors Media
Phelps Dodge Phelps Dodge
Thomas M. Foster Susan M. Suver
(602) 234-8139 (602) 234-8003
Gregory W. Stevens
(602) 234-8166
Arthur Schmidt & Associates, Inc. Sard Verbinnen & Co
Martin Zausner/Alan Weinstein/Joan Harper George Sard/David Reno/Debbie Miller
(212) 953-5555 (212) 687-8080
PHELPS DODGE REGISTRATION STATEMENTS FOR ASARCO AND CYPRUS AMAX EXCHANGE
OFFERS DECLARED EFFECTIVE BY THE SEC
------------------------------------------------------------------------
PHOENIX, AZ, September 2, 1999 -- Phelps Dodge Corporation (NYSE: PD)
announced today that the registration statements for its previously announced
exchange offers for all outstanding Asarco Incorporated (NYSE: AR) and Cyprus
Amax Minerals Company (NYSE: CYM) common shares have been declared effective by
the Securities and Exchange Commission. Accordingly, Phelps Dodge intends to
commence both exchange offers tomorrow, Friday, September 3, 1999.
Under the terms of the Phelps Dodge exchange offers, Asarco
shareholders would receive 0.4098 Phelps Dodge shares for each share of Asarco
stock tendered and Cyprus Amax shareholders would receive 0.3135 Phelps Dodge
shares for each share of Cyprus Amax stock tendered. The expiration date of the
exchange offers will be 12:00 midnight, New York City time, on Friday, October
1, 1999 and may be extended from time to time by Phelps Dodge until the various
conditions of the exchange offers have been satisfied or waived.
"We are pleased to be able to take our exchange offers directly to
Asarco and Cyprus Amax shareholders so quickly," said Douglas C. Yearley,
Chairman and CEO of Phelps Dodge. "Under our offers, Asarco and Cyprus Amax
shareholders will receive substantial premiums, a $2.00 annual dividend and the
significant upside potential of the combined entity."
-more-
<PAGE>
Phelps Dodge Corporation is among the world's largest producers of
copper. The company also is one of the world's largest producers of carbon
black, one of the world's largest manufacturers of magnet wire, and has
operations and investments in mines and wire and cable manufacturing facilities
around the world. Phelps Dodge has operations in 28 countries.
This news release is neither an offer to exchange nor a solicitation of an offer
to exchange the common stock of Asarco or Cyprus Amax for common stock of Phelps
Dodge. The offers will be made solely by means of Phelps Dodge's Prospectus and
the related Letter of Transmittal. This news release shall not constitute an
offer to sell or the solicitation of an offer to buy nor shall there be any sale
of these securities in any state in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the securities laws of
any such state.
# # #
<PAGE>
FOR IMMEDIATE RELEASE
Contacts:
Investors Media
Phelps Dodge Phelps Dodge
Thomas M. Foster Susan M. Suver
(602) 234-8139 (602) 234-8003
Gregory W. Stevens
(602) 234-8166
Arthur Schmidt & Associates, Inc. Sard Verbinnen & Co
Martin Zausner/Alan Weinstein/Joan Harper George Sard/David Reno/Debbie Miller
(212) 953-5555 (212) 687-8080
PHELPS DODGE COMMENCES EXCHANGE OFFERS FOR ASARCO AND CYPRUS AMAX
-----------------------------------------------------------------
PHOENIX, AZ, September 3, 1999 -- Phelps Dodge Corporation (NYSE: PD)
announced today that it has formally commenced exchange offers for all
outstanding Asarco Incorporated (NYSE: AR) and Cyprus Amax Minerals Company
(NYSE: CYM) common shares.
Phelps Dodge's registration statements for its previously announced
exchange offers to acquire Asarco and Cyprus Amax were declared effective by the
Securities and Exchange Commission yesterday. Under the terms of the Phelps
Dodge exchange offers, Asarco shareholders would receive 0.4098 Phelps Dodge
shares for each share of Asarco stock tendered and Cyprus Amax shareholders
would receive 0.3135 Phelps Dodge shares for each share of Cyprus Amax stock
tendered. The expiration date of the exchange offers will be 12:00 midnight, New
York City time, on Friday, October 1, 1999 and may be extended from time to time
by Phelps Dodge until the various conditions of the exchange offers have been
satisfied or waived.
"We are pleased to formally commence our exchange offers for Asarco and
Cyprus Amax," said Douglas C. Yearley, Chairman and CEO of Phelps Dodge. "We
look forward to a swift completion of these transactions."
Phelps Dodge Corporation is among the world's largest producers of
copper. The company also is one of the world's largest producers of carbon
black, one of the world's largest
<PAGE>
manufacturers of magnet wire, and has operations and investments in mines and
wire and cable manufacturing facilities around the world. Phelps Dodge has
operations in 28 countries.
This news release is neither an offer to exchange nor a solicitation of an offer
to exchange the common stock of Asarco or Cyprus Amax for common stock of Phelps
Dodge. The offers will be made solely by means of Phelps Dodge's Prospectus and
the related Letter of Transmittal. This news release shall not constitute an
offer to sell or the solicitation of an offer to buy nor shall there be any sale
of these securities in any state in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the securities laws of
any such state.
# # #
<PAGE>
Phelps Dodge Corporation
<PAGE>
Phelps Dodge Corporation
These slides include "forward-looking statements" that express
expectations of future events or results. All statements based on future
expectations rather than on historical facts are forward-looking statements that
involve a number of risks and uncertainties, and the company cannot give
assurance that such statements will prove to be correct. Please refer to the
Management's Discussion and Analysis section of the company's report on Form
10-K for the year ended December 31, 1998.
2
<PAGE>
Phelps Dodge Corporation
TODAY'S AGENDA
Overview
The Time is Now
Why Phelps Dodge?
Three-way Combination
3
<PAGE>
Phelps Dodge Corporation
STRATEGIC VISION
Challenging industry environment mandates consolidation
Truly unique opportunity for regional integration
Enhanced scale and scope provides strategic and operational opportunities
Combination will create a new U.S.-based global leader (e.g., Exxon, ALCOA, Dow)
4
<PAGE>
Phelps Dodge Corporation
OVERVIEW
5
<PAGE>
Phelps Dodge Corporation
SUMMARY HIGHLIGHTS
Superior and immediate value
Greater upside potential
Compelling three-way combination
Proven Phelps Dodge track record of delivering shareholder value
VOTE AGAINST THE ASARCO/CYPRUS AMAX NO-PREMIUM MERGER
6
<PAGE>
Phelps Dodge Corporation
August 10: Phelps Dodge approaches Asarco and Cyprus Amax CEOs
Asarco and Cyprus Amax refuse to talk
August 11: Phelps Dodge sends initial proposals to CEOs
August 12: Asarco and Cyprus Amax refuse to talk
Phelps Dodge sends initial proposals to Boards
August 20: Asarco and Cyprus Amax PUBLICLY reject proposals without
negotiating Phelps Dodge publicly announces higher bids
August 25: Asarco and Cyprus Amax reject higher Phelps Dodge bids
without negotiating by proposing "unreasonable" exchange
ratio; revise two-way proposal
August 27: Phelps Dodge files exchange offer registration statements
and proxy materials against Asarco/Cyprus Amax; commences
litigation
September 3: Phelps Dodge commences exchange offers
7
<PAGE>
Phelps Dodge Corporation
PHELPS DODGE'S SUPERIOR OFFERS
TERMS:
0.4098 Phelps Dodge shares per Asarco share
0.3135 Phelps Dodge shares per Cyprus Amax share
BENEFITS:
Approximate 30%* premiums
$2.00 annual dividend (4.1X Asarco/Cyprus Amax dividend)
Minimum of $200 million cash cost savings (vs. $125 million)
$65 million in lower depreciation
FINANCIAL IMPACT:
Cash flow accretive immediately
EPS accretive year 2**
Maintains strong balance sheet and good access to capital
* Valuations/premiums based on share prices before trading was halted for these
stocks on the morning of 8/20/99: $58.69 Phelps Dodge; $18.50 Asarco: $14.25
Cyprus Amax; maintains Asarco/Cyprus Amax Announced exchange ratio of 0.765
** Based on current portfolio and analysts' estimates of copper prices of
$0.80-$0.85 per pound in 2001.
8
<PAGE>
Phelps Dodge Corporation
PHELPS DODGE'S SUPERIOR OFFERS
<TABLE>
<CAPTION>
<S> <C>
PHELPS DODGE OFFERS ASARCO/CYPRUS OFFER
Significant premiums No premium
- - $600 million down payment on synergies - $5.00 taxable cash distribution
- - Sharing of future synergies through
significant equity positions
$2.00 annual dividend*
20(cent) annual dividend
$200 million cash cost savings
$125 million cash cost savings
Enhanced upside potential due to superior
management, extensive project inventory and Another promise after years of
proven track record underperformance
Financial flexibility to optimize value of
non-core assets Fire sale of assets promised within
History of creating shareholder value 6 months
Shareholder-unfriendly actions
*4.1xAsarco/Cyprus Amax dividend on a - "No talk" clause
share equivalent basis - management entrenchment
- excessive break up fees
</TABLE>
9
<PAGE>
Phelps Dodge Corporation
PHELPS DODGE IS OFFERING AN ATTRACTIVE PREMIUM
<TABLE>
<CAPTION>
<S> <C> <C> <C>
3/8/1998 Alumax/ALCOA Aluminum 39%
8/4/1999 Union Carbid/Dow Chemical Chemicals
38%
4/1/1999 Atlantic Richfield/BP Amoco Oil/Gas
26%
1/25/1998 Norcen Energy/ Energy 26%
Union Pacific Resources
8/16/1999 Poco Petroleums/ Oil/Gas 25%
Burlington Resources
8/11/1999 Reynolds/ALCOA Aluminum 24$
8/ll/1998 Amoco/British Petroleum Oil/Gas 23%
12/1/1998 Mobil/Exxon Oil/Gas 23%
</TABLE>
* Premiums based on share prices before trading was halted for these stocks on
the morning of 8/20/99: $58.69 Phelps Dodge; $18.50 Asarco: $14.25 Cyprus Amax;
maintains Asarco/Cyprus Amax Announced exchange ratio of 0.765. Sourse: Morgan
Stanley Dean Witter
10
<PAGE>
Phelps Dodge Corporation
FAST TRACK TO COMPLETION
Phelps Dodge exchange offers
- - Offers commenced September 3
- - Offers can close as early as mid-October
Antitrust clearance for three-way combination
- - Confident of ability to obtain regulatory approval
Phelps Dodge shareholder vote
- - Vote scheduled for October 13
Asarco/Cyprus Amax shareholder votes - September 30
- - Need both affirmative votes for Asarco/Cyprus Amax merger to proceed
- - Asarco requires majority of voting shares
- - Cyprus Amax requires majority of outstanding shares
11
<PAGE>
Phelps Dodge Corporation
THE TIME IS NOW
12
<PAGE>
Phelps Dodge Corporation
THE TIME IS NOW
- - Industry need for consolidation, improved productivity and cost efficiencies
- - Integrate once, not twice; capture synergies and transfer value to
shareholders now
- - Phelps Dodge's proven ability to optimize operations and achieve cost savings
Phelps Dodge will withdraw offers if AR/CYM shareholders approve two-way merger
at September 30 vote
13
<PAGE>
Phelps Dodge Corporation
SHAREHOLDER VALUE?
Asarco and Cyprus Amax Merger Agreement HAs Extremely Onerous Provisions
Unusual "no talk" clause
Management entrenchment
- - Guaranteed positions for four senior executives through
- - 2002 annual meeting
- - 75% of Board vote required for change in roles; 25% of Board seats held by
management
Unreasonable break-up fees
90-day takeover "relaxation" disingenuous
- - No ability to replace Board
- - Current change-of control arrangements remain in effect
- - Shareholder mechanism to redeem pill
- - unnecessarily cumbersome
Boards could easily authorize discussions to achieve highest shareholder value
14
<PAGE>
Phelps Dodge Corporation
WHY PHELPS DODGE ?
15
<PAGE>
Phelps Dodge Corporation
WHY PHELPS DODGE?
Superior value
Proven track record
- - Superior shareholder returns
- - Superior ability to deploy capital
Shareholder-oriented management
Operating excellence and financial strength
- - Industry pacesetter and technological leader
- - Highly attractive portfolio of growth opportunities
Bright future for continued value creation
16
<PAGE>
Phelps Dodge Corporation
SUPERIOR SHAREHOLDER RETURNS
Last 15 years
[GRAPHICAL DISPLAY OMITTED]
This graph displays the total return on common stock of Phelps Dodge (1024%),
Cyprus Amax (102%) and Asarco (25%) over the past 15 years using a base date of
August 10,1994.
Source: Morgan Stanley Dean Witter
Note: Cyprus Amax returns measured from 5/85 IPO.
17
<PAGE>
Phelps Dodge Corporation
TOTAL RETURNS COMPARISON
Through August 11, 1999
1 3 5 10 15
Years Years Years Years Years
----- ----- ----- ----- -----
Phelps Dodge 22% 13% 20% 161% 1024%
Asarco (7) (16) (27) (20) 25
Cyprus Amax 26 (22) (40) (26) 102
S&P 500 23% 107% 213% 369% 687%**
S&P Metals 36 (22) (16) 25* 124**
Source: Morgan Stanley Dean Witter Note: Dividends reinvested
*S&P 500 and S&P Metals are from
1/1/90
** Without dividend reinvestment
18
<PAGE>
Phelps Dodge Corporation
SUPERIOR CAPITAL RETURNS
Phelps Dodge has demonstrated a superior ability to deploy capital
Every property must earn in excess of its cost of capital over the copper cycle
Strong management and operating leadership
- - Not afraid to make the tough decisions
19
<PAGE>
Phelps Dodge Corporation
PHELPS DODGE RETURNS SUBSTANTIALLY IN EXCESS OF ITS COST OF CAPITAL
[GRAPHICAL DESIGN OMITTED]
5-year return on equity history(1)
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
Phelps Dodge 17% 30% 17% 16% 3%
Cyprus Amax 8 18 7 11 1
Asarco 2 13 5 5 (7)
Average COMEX
copper price per
pound $1.07 $1.35 $1.06 $1.04 $0.75
PD 5-year avg: 17 %
CYM 5-year avg: 9 %
AR 5-year avg: 4%
Note: (1) ROE is defined as net income (excluding non-recurring
gains/losses)devided by average shareholders' equity.
20
<PAGE>
Phelps Dodge Corporation
SUPERIOR VALUE CREATION
Total Growth (1989-1998)
[Graphic material omitted]
Book Value/Share (%)
Phelps Dodge +129.2%
Cyprus Amax +11.2%
Asarco (16.9%)
Source: Factset
21
<PAGE>
Phelps Dodge Corporation
SHAREHOLDER ORIENTED MANAGEMENT
Track record of increasing dividend per share
History of share buybacks
- - 14.4 million shares since end of 1994;
- - 20% of outstanding
Manage for cash
Active management of asset portfolio
22
<PAGE>
Phelps Dodge Corporation
SUPERIOR DIVIDEND HISTORY
[Graphic material omitted]
This graph explains the 10-year dividend history of Phelps Dodge, Cyprus Amax
and Asarco. The extraordinary dividends are not included.
Source: (1) Factset
23
<PAGE>
Phelps Dodge Corporation
OPERATING EXCELLENCE
Growth in Copper Production
[Graphic material omitted]
This graph explains how copper production of Phelps Dodge, Asarco, and Cyprus
Amax has grown from the beginning of 1993 to 1998. Phelp Dodge CAGR is 9.8%,
Asarco CAGR is 3.9 % and Cyprus Amax CAGR is 8.9 %.
24
<PAGE>
Phelps Dodge Corporation
OPERATING EXCELLENCE
Technology Pacesetter
[Graphic material omitted]
Large scale SX/EW "Expert" control systems
Computerized haul truck dispatch Concentrator adaptive control
GPS ore control Mine for leach
Leach recovery optimization Haul truck tire technology
Concentrate grade enhancement
25
<PAGE>
Phelps Dodge Corporation
OPERATING EXCELLENCE: COMMITMENT TO ENHANCE COST EFFICIENCIES
Morenci Mine to convert all copper production to SX/EW
Most capital efficient alternative
Conversion will reduce unit costs
- - Cash production cost reduction of $0.09 per pound
- - Full cost reduction of $0.07 per pound
- - $220 million conversion complete by first quarter 2001
Leverages SX/EW core competency
- - Eliminates process steps of concentrating, smelting and refining
- - Phelps Dodge is the recognized leader in this technology
Strengthens Morenci's position within Phelps Dodge portfolio
- - Enhances flexibility; both mills on standby status
26
<PAGE>
Phelps Dodge Corporation
PORTFOLIO OF GROWTH OPPORTUNITIES
1998 Reserve and Mineralized Material
(Lbs in billions) Est. Recoverable % Attributable
Copper Ownership Recoverable
Ore Reserves
Morenci 10.1 85% 8.6
Candelaria 7.0 80% 5.6
Chino 5.2 67% 3.5
Tyrone 1.8 100% 1.8
Safford 5.7 100% 5.7
Other - Ajo/Cobre/Ojos 3.7 100% 3.7
TOTAL 33.5 28.9
Mineralized Material
Morenci:
Western Copper 6.0 85% 5.1
Garfield 3.4 85% 2.9
American Mountain 0.4 85% 0.4
Safford.
Lone Star 7.2 100% 7.2
Sanchez 0.8 100% 0.8
Other - Cochise/Cu Basin/PV 2.5 varies 2.2
SPCC 20.6 14% 2.8
TOTAL 40.9 21.4
TOTAL
27
<PAGE>
Phelps Dodge Corporation
FINANCIAL STRENGTH AFTER COMBINATION
Strong cash flow generation
Strong, liquid balance sheet
Debt to capital ratio of 40%*
- - Target reduction to near 30% within 3 years
- - Ratios could be reduced further with non-core asset sales
Cost-competitive throughout the business cycle
Poised to prosper tin better copper pricing environment
*Before asset sales
28
<PAGE>
Phelps Dodge Corporation
SUPERIOR CREDIT PROFILE
LTM ended 6/30/99 Phelps Dodge Asarco/ Phelps Dodge
Cyprus Amax Asarco/
Cyprus Amax
Net Debt/Book Cap. 27.5% 33.3% 22.3%
Net Debt/Market Cap. 21.5% 44.4% 22.9%
EBIT/Gross Interest Expense 1.3X 1.8X 2.2X
EBITDA/Gross Interest Expense 4.2X 4.5X 5.5X
Note: Assumes debt reduction of $1B from Cyprus Amax coal sale and $850 MM from
sale of non-core assets.
Source: Morgan Stanley Dean Witter
29
<PAGE>
Phelps Dodge Corporation
THREE WAY COMBINATION
30
<PAGE>
Phelps Dodge Corporation
THREE IS BETTER THAN TWO
Greater cash synergies
Unique opportunity to create a large, resource-rich portfolio of lower-cost
global copper assets
Opportunity for value-based portfolio management
- - Phelps Dodge has history of smart capital allocation
Increased ability to compete for world-class projects
Enhanced flexibility to excel across business cycles
31
<PAGE>
Phelps Dodge Corporation
PHELPS DODGE'S PLAN TO INTEGRATE ASARCO AND CYPRUS AMAX
Integrate worldwide operations
- - Administrative functions in United States
- - Administrative functions in Chile and Peru
- - Mining operations in southwestern United States
- - Worldwide exploration and development activities
Reduce operating expenses
Realize additional efficiencies in exploration
In addition, opportunities to reduce capital expenditures
Achieve $200 million in annual cash cost savings
32
<PAGE>
Phelps Dodge Corporation
SUPERIOR COST SAVINGS
(in$ Millions) Phelps Dodge's Two-Way Merger's
Estimated Annual Estimated Annual
Savings Savings
Cash Cost Savings $200 $125
Lower Depreciation $65 $75
Total Savings $265 $200
Note: All estimates are based on public information and Phelps Dodge experience
33
<PAGE>
Phelps Dodge Corporation
SUMMARY OF CASH COST SAVINGS
(In $ Millions)
SG&A Expense $85
Exploration 55
---
Operating Synergies
Reduce Supply Costs....................................... 28
Reduce Electric Power Costs............................... 12
Optimize Copper Refining Operations....................... 7
Optimize Mill/Lease Mix................................... 7
Integrate Arizona Management
and Support Services...................................... 6
--
Total Operating Synergies 60
----
Total Cash Cost Savings $200
Note: All estimates are based on public information and Phelps Dodge experience
34
<PAGE>
Phelps Dodge Corporation
RESOURCE-RICH, COST-COMPETITIVE
Current production levels = 3.8 billion pounds
Target CASH production cost = less than $0.50 per pound
Target FULL product cost = less than $0.60 per pound
Core portfolio of world-class copper mines represents more than 50% of current
annual production
- - Morenci, SPCC, El Abra, Cerro Verde, Candelaria
- - 2.0 billion pounds at average cash cost of less than 0.50 per pound
35
<PAGE>
Phelps Dodge Corporation
BENEFICIAL COPPER PRODUCTION/ CASH COST PROFILE
[Graphic material omitted]
This graph displays copper production compared to cash cost of El Abra, Cerro
Verde, Candelaria, SPCC, Morenci, Chino Tyrone, Bagdad, Miami, Sierita, Mission
and Ray. The target level is 50 cents/pound.
Source: Brook Hunt; Modified 1999 EST
36
<PAGE>
Phelps Dodge Corporation
CONCLUSION
Superior and immediate value
Greater upside potential
Compelling three-way combination
Proven Phelps Dodge track record of delivering shareholder value
Vote against the Asarco/Cyprus Amax no-premium merger
37
<PAGE>
Phelps Dodge Corporation
PHELPS DODGE CORPORATION
38
