Freeport’s energy business goes public
Freeport-McMoRan (FCX) has finally announced an IPO (initial public offering) for its energy business after filing a registration statement with the US SEC (Securities and Exchange Commission). The IPO registration comes almost two months after Freeport first disclosed its plans to launch the IPO during its 1Q 2015 earnings conference call.
In this series, we’ll analyze how Freeport-McMoRan investors could be affected by an IPO for the firm’s energy business.
Freeport acquired these energy assets for a consideration of $9 billion two years ago. The logic behind a predominantly copper producer entering the energy business was to create a diversified natural resources company. But the bet went sideways when energy prices tumbled toward the end of last year.
The impact of lower energy prices is quite visible on Freeport’s share price. It has fallen by ~15% this year, as you can see in the chart above.
Freeport-McMoRan wasn’t alone in its desire to create a diversified company. BHP Billiton (BHP) also tried its hand at this. Earlier this year, however, it spun off its non-core assets into a new entity called South32 (SOUHY). South32 will have aluminum, manganese, silver, and coal assets. This would leave BHP with mainly iron ore, petroleum, and copper assets.
In this series, we’ll also look at how things are moving in Freeport-McMoRan’s core copper market. First, we’ll consider the company’s energy IPO in the next part of this series.