SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 15, 1999
ASARCO Incorporated
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(Exact name of registrant as specified in its charter)
New Jersey 1-164 13-492440
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
180 Maiden Lane, New York, New York 10038
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 510-2000
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Item 5. Other Events.
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On July 15, 1999 Cyprus Amax Minerals Company ("Cyprus") and
ASARCO Incorporated ("Asarco") announced an agreement, unanimously approved by
the Board of Directors of Asarco and Cyprus, for the combination of the two
companies in a merger-of-equals transaction. Enclosed is the press release
describing the proposed transaction. Asarco has also amended its 1989 and 1998
shareholder rights plans to permit Asarco and Cyprus to enter into the merger
agreement and to consummate the transaction contemplated therein without causing
the rights under the plans to become exercisable.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit No. Exhibit
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1. Press Release of Asarco and Cyprus dated July 15, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
ASARCO Incorporated
(Registrant)
By:/s/ Francis R. McAllister
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Francis R. McAllister
Chairman and Chief
Executive Officer
Dated: July 20, 1999
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INDEX TO EXHIBITS
Exhibit No. Exhibit
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1. Press Release of Asarco and Cyprus dated July 15, 1999.
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Exhibit 1 Press Release of Asarco and Cyprus dated July 15, 1999.
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CYPRUS AMAX MINERALS COMPANY ASARCO NEWS
FOR IMMEDIATE RELEASE
CYPRUS AMAX MINERALS COMPANY AND ASARCO INCORPORATED
ANNOUNCE MERGER OF EQUALS
--Strategic Combination Creates Largest Publicly Traded
Copper Company in the World--
--New Company to Realize $150 Million in Annual Synergies -
DENVER, CO and NEW YORK, N.Y., July 15, 1999 -- Cyprus Amax Minerals
Company (NYSE:CYM) and ASARCO Incorporated (NYSE:AR) today announced an
agreement, unanimously approved by the Boards of both companies, for the
combination of the two companies in a merger-of-equals transaction. The new
Company, which will be named Asarco Cyprus Incorporated, will be the largest
publicly traded copper company.
Under the terms of the transaction, Cyprus Amax shareholders will
receive 0.765 shares of Asarco Cyprus common stock for each share of Cyprus Amax
common stock they own and Asarco shareholders will receive one share of Asarco
Cyprus common stock for each share of Asarco common stock they own. The exchange
of shares for both companies' shareholders is expected to be tax-free. An
initial dividend rate of 5 cents per share per quarter, the same dividend rate
paid currently by Cyprus Amax and Asarco, is expected.
Asarco Cyprus will have its corporate headquarters in New York City and
its operations headquarters in Tempe, Arizona. The combined company will have a
beneficial interest in annual copper production of approximately 2.0 billion
pounds, second only in size to the Chilean government-owned copper company,
Codelco. Asarco Cyprus will have the financial capacity and resources necessary
to further develop and expand its low-cost copper properties. The new Company's
annual after-tax earnings sensitivity will be approximately 14 cents per share
for every one cent change in the price of copper.
The merger is expected to reduce the combined expenses of Cyprus Amax
and Asarco by approximately $150 million annually. The expense reductions will
be realized in corporate overhead, administrative costs, material and supply
costs and from operating synergies. Depreciation expense will also be reduced.
When the expense reductions are fully implemented by 2001, the new Company's
cash cost of producing copper is expected to be approximately 50 cents per
pound. At that point, Asarco Cyprus expects that it will require a copper price
of only 65 cents per pound to break even on a net earnings basis. As a result of
the expense reductions, the transaction will be accretive to earnings for both
companies in 2000.
Asarco Cyprus will have a 16-person Board of Directors with eight
members nominated by Cyprus Amax and eight nominated by Asarco. Milton H. Ward,
Cyprus Amax's chairman, president and chief executive officer, and Francis R.
McAllister, Asarco's chairman and chief executive officer, will serve as
co-chief executive officers and directors of Asarco Cyprus. Mr. Ward will be
chairman and co-CEO through April 2000 and, following April 2000, will be
chairman until his retirement at the end of 2000. Mr. Ward will remain a
director of the new company following his retirement. Mr. McAllister will be
president and co-CEO through April 2000, president and chief executive officer
until the end of 2000 and will become chairman, president and chief executive
officer at the end of 2000.
Ward, chairman, president and chief executive officer of Cyprus Amax,
and McAllister, chairman and chief executive officer of ASARCO Incorporated,
said, "We are very excited about the new Company we are creating. We believe
that copper has very strong growth potential. This strategic combination results
in a company with large copper and molybdenum ore reserves, the financial
capacity to develop, enhance and expand our copper assets and the ability to
meet the challenges of low copper prices and to generate substantial cash flow
during periods of strong copper prices.
"We plan to build on the strengths of both companies by rationalizing
operations, enhancing operating efficiencies, leveraging purchasing power and
devoting resources to low-cost copper production. Shareholders, employees,
customers and the communities of which we are part will all benefit from the
combination of our companies.
"Our operations are highly complementary. Our U.S. mines, which are
primarily in Arizona, are in close proximity to one another, providing the
opportunity to achieve operating efficiencies and reduce administrative
overhead. Our mines in Peru and Chile have similar potential for operating
efficiencies. The new Company will have substantially greater financial
capacity, lower costs and more efficient operating dynamics. It is a combination
which we believe will lead to significant long-term value for our shareholders."
Asarco Cyprus' beneficial interest in copper ore reserves will be
approximately 62 billion pounds of contained copper with excellent potential for
further expansion.
Asarco Cyprus will also be the world's largest producer of molybdenum,
a major producer of specialty chemicals, a regional producer of aggregates and
the owner of a 30% interest in Kinross Gold Corporation.
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On a pro forma basis, the new company will have cash of approximately
$1.4 billion, total assets of approximately $8.0 billion and equity market
capitalization of approximately $2.0 billion.
Jeffrey G. Clevenger, currently executive vice president of Cyprus Amax
and president of Cyprus Climax Metals Company, will be executive vice president
and chief operating officer of Asarco Cyprus and will have responsibility for
Asarco Cyprus' copper and molybdenum businesses. Kevin R. Morano, currently
president and chief operating officer of Asarco, will be executive vice
president and chief financial officer of Asarco Cyprus and will have
responsibility for Asarco Cyprus' finance and administration functions and for
its non-copper businesses. Both Mr. Clevenger and Mr. Morano will be directors
of Asarco Cyprus. Southern Peru Copper Corporation (NYSE:PCU), 54.3% owned by
Asarco, whose president and chief executive officer, Charles B. Smith, is based
in Lima, Peru, will continue to report directly to Mr. McAllister, who will
continue to be chairman of Southern Peru Copper Corporation.
The combination, which is subject to regulatory approvals and the
approvals of the shareholders of both Cyprus Amax and Asarco, is expected to
close in the 4th Quarter of 1999. Merrill Lynch & Co. acted as financial advisor
to Cyprus Amax and Credit Suisse First Boston acted as financial advisor to
Asarco.
Cyprus Amax is a leading producer of copper, the world's largest
producer of molybdenum, and holds a 30% interest in Kinross Gold Corporation.
Cyprus Amax is exploring for minerals worldwide.
Asarco is one of the world's leading producers of copper, specialty
chemicals and aggregates.
Actual results may vary materially from any forward-looking statement
the Companies make. Refer to the Cautionary Statement and Risk Factors contained
in Cyprus Amax's and Asarco's 1998 Form 10-Ks.
FOR FURTHER INFORMATION: John Taraba (303) 643-5244
Gerald J. Malys (303) 643-5060
Jerry W. Cooper (212) 510-1810 (212)510-1835 (FAX)
Donald M. Noyes (212) 510-1813
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