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Carl Icahn’s Big Plans for Freeport-McMoRan

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Nov. 20 2020, Updated 3:31 p.m. ET

Carl Icahn

Carl Icahn is currently the single largest shareholder in Freeport-McMoRan (FCX), according to his regulatory filings in August 2015. While announcing his 8.5% stake in Freeport-McMoRan, Icahn said that he intends to have discussions with Freeport management “relating to the Issuer’s capital expenditures, executive compensation practices, and capital structure as well as curtailment of the Issuer’s high-cost production operations.”

So how are things progressing so far? Let’s explore.

Together, Freeport and Newmont Mining (NEM) form 4.5% of the Materials Select Sector SPDR ETF (XLB).

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Capital structure

On the capital structure side, Freeport announced an ATM (at-the market) equity offering of $1 billion in September 2015. The announcement came some three weeks after Carl Icahn disclosed his stake in the company. It should be noted that Freeport had raised another $1 billion from the same route. However, that offering was announced before Carl Icahn’s stake was publicly disclosed.

Freeport also announced capital expenditure cuts in August 2015. Interestingly, this announcement came only hours before the disclosure of Carl Icahn’s 8.5% stake in the company.

Board representation

Now, Carl Icahn has two seats on Freeport’s board. The move comes a day after Freeport’s board was trimmed to nine members from its previous 16 members. In his statement following the representation on Freeport’s board, Carl Icahn cited examples of companies like eBay (EBAY), Mentor Graphics (MENT), and Herbalife, whose “shareholder value has been greatly enhanced” after he won board representation.

The coming weeks could be interesting for Freeport investors as the company approaches a strategic decision on its energy assets. According to Freeport, the company is reviewing several options, including the previously announced IPO (initial public offering), a spin-off, a joint venture agreement, and further spending cuts.

You can read more about the recent developments in this industry by visiting Market Realist’s Copper page.

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