Icahn Takes Stake in Rout-Beleaguered Freeport-McMoRan

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The billions in cutbacks that Freeport-McMoRan Inc. has taken in its battle against plunging commodity prices may not be enough for one of its newest shareholders, billionaire activist investor Carl Icahn.

Icahn amassed about 8.5 percent of the international natural resources company, the investor disclosed Thursday in a filing with the U.S. Securities and Exchange Commission.

The activist may seek board representation and intends to hold talks with the Phoenix-based company on “capital expenditures, executive compensation practices and capital structure as well as curtailment of the issuer’s high-cost production operations,” according to the filing.

The filing was released after the close of regular trading in New York on Thursday, where Freeport rose 19 percent to $12.15 at 5:23 p.m. Prior to the release, Freeport soared 29 percent after the company said in a statement it plans to cut production at some mining operations, reduce its U.S. workforce and lower capital spending next year to $4 billion from a previously forecast $5.6 billion.

Icahn’s investing firm filed a Hart-Scott-Rodino Act notice about a week ago, alerting regulators and Freeport that he intended to buy as much as 25 percent of the company, said two people familiar with the notice who asked not to be identified discussing non-public information. Icahn hadn’t held talks with management or the board as of Wednesday, Thursday’s filing states.

‘Open Dialogue’

Freeport “maintains an open dialogue with our shareholders and welcomes constructive input toward our common goal of enhancing shareholder value,” the company said Thursday in a statement e-mailed 11 minutes after Icahn’s 13D activist filing was made public. Thursday’s 13D filing shows Icahn had already begun purchasing the shares as of July 17.

Eric Kinneberg, a Freeport spokesman, and Darren McDermott, a spokesman for the company with Brunswick Group, both declined to comment beyond Thursday’s statements.

Shares of Freeport plunged 66 percent this year through Wednesday as the company faced tumbling prices for almost everything it produces. The copper miner bet big on the energy market in late 2012.

“Activist investors are targeting mining companies as an area to unlock value,” Ken Hoffman, a senior analyst at Bloomberg Intelligence said Friday in a report. “With metal prices in severe bear markets and capital spending still high at many miners, activists may try to sharply cut costs and pare off what they perceive as non-core assets.”

Outspoken Shareholder

Icahn may want to take aim at Freeport’s move into oil and gas, which has become a drag on the mining company following a collapse in the price of crude. From the beginning, some investors were skeptical the near-simultaneous acquisitions of McMoRan Exploration Co. and Plains Exploration & Production Co. would provide the hedge against copper and gold downturns that Freeport promised.

Icahn, 79, rebranded as an activist investor and outspoken shareholder advocate after gaining fame as a corporate raider in the 1980s. He has in recent years taken stakes in companies including Apple Inc., Cheniere Energy Inc., Manitowoc Co. and EBay Inc., agitating for shareholder-enriching changes. In May he led a surprising venture capital investment round in car-hailing service Lyft Inc.

Icahn, who is based in New York, is worth about $20 billion, according to the Bloomberg Billionaires Index, and primarily invests his own fortune, rather than relying on money from outsiders.

Activist investors buy equity stakes in publicly traded companies and push executives and directors to make changes they argue will boost shareholder returns.

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