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Ahead: Another Copper Coup?

Inside Wall Street


Idaho investor John Simplot's timing was near perfect--at least in the case of Magma Copper. Several days before Magma announced on Dec. 1 that Australia's Broken Hill Proprietary had offered $2.4 billion for it, Simplot upped his Magma stake from 5.2% to 9.8% (BW--Dec. 11). Guess what. Simplot has done exactly the same thing with ASARCO (AR): On Feb. 22, he raised his stake in ASARCO, one of the world's largest copper producers, from 5.1% to 9.8%. Could history repeat itself?

Some pros who keep tabs on Simplot's investments think so, and they've started buying into ASARCO, too. They sniff a takeover--and suspect another foreign multinational with mining interests will soon make a move on ASARCO. Says a New York investment banker: "Simplot has tight contacts in the mining world, and he seems aware of something that will befall ASARCO similar to what happened to Magma."

Everen Securities analyst Vahid Fathi wouldn't be surprised if a suitor emerged soon. "The Street underestimates the need for rapid consolidation in mining," says Fathi. He adds that ASARCO is undervalued--and one of the most attractive buyouts around.

"If you use the blueprint of Magma-Broken Hill, ASARCO, now at 29 3/4, is worth 56 to 58 in a buyout," says Fathi. No other mining stock, he notes, is as undervalued as ASARCO, trading way below its book value of 37 a share. Even with no buyout, the stock is worth 47, says Fathi. ASARCO owns 63% of Southern Peru Copper, a producer the analyst describes as a "very valuable asset." ASARCO Treasurer Tom Findley says the company regards Simplot as a long-term investor but won't comment on takeover speculation.BY GENE G. MARCIALReturn to top

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