Freeport-McMoRan will acquire Midlands Energy

NEW YORK -- Freeport-McMoRan Inc. announced Thursday it has reached a definitive agreement to acquire Midlands Energy Co. for about $250.5 million in cash and securities.

The boards of Freeport-McMoRan, a New York-based energy and minerals producer, and Midlands, a Lakewood, Colo., oil and gas producer, unanimously approved the merger transaction.


Under the agreement a Freeport-McMoRan subsidiary will soon launch a $135 million tender offer for 4.5 milliion shares of Midlands common - or about 52 percent of the company's outstanding stock -- at $30 a share in cash.

After the tender offer is completed, each of the remaining 4.2 million shares of Midlands' common stock will then be converted into $27.50 principal amount of a new 30-year 10.5 percent convertible subordinated sinking fund debenture of Freeport-McMoRan in a $115.5 deal.

The companies said the debentures will be convertible into Freeport-McMoRan common stock at about 1.714 times the price per share of Freeport-McMoRan's common prior to the merger.

Freeport-McMoRan said it plans to list the debentures on the New York Stock Exchange.

In connection with the merger pact, Midlands has given Freeport McMoRan an option to purchase approximately 1.6 million shares of its common -- or about an 18.5 percent stake in Midlands -- at $27.50 a share. Midlands also has granted Freeport-McMoRan an option to buy its interests in the Bowdoin oil and gas field in Montana.


Freeport-McMoRan Chairman James R. Moffett said the Midlands takeover is part of the company's program to expand its natural resource base. Freeport-McMoRan was created by the merger of Freeport Minerals Co. and McMoRan Oil & Gas in April 1981.

As of Dec. 31, 1983 Freeport-McMoRan, which is involved in onshore and offshore oil and gas production in the United States, had net proved oil reserves of 12.5 billion barrels of oil and 223 billion cubic feet of natural gas.

Midland President Robert M. Danos said the board concluded that the transaction satisified its 'objective of maximizing value for its shareholders and allowing them to participate in the potential growth of the combined companies while providing an attractive annual cash return.'

Midlands, which was spun off from KN Energy Inc. last December and owns acreage primarily in the western United States, had proved gas reserves of 207 billion cubic feet and 1.2 billion barrels of oil at yearend 1983.

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