Freeport, Plains Exploration and the University of Texas: When is a Deal Too Close to Home?

Freeport CEO and McMoRan Exploration Co-Chairman Richard Adkerson made large sums of money on this deal as well while Freeport shareholders lost more than 10 percent of their investment in the company. In fact, if you go back and look at the times that he has sold shares over the past year, Adkerson should give up running Freeport and get a job trading at a hedge fund. He so perfectly called the top in Freeport shares back in February 2012 that even Steve Cohen would be jealous. Petainen’s chart on Forbes shows his sales of Freeport stock.

This deal may not be in the best interest of Freeport shareholders. After all, Freeport is a copper miner and the acquired companies are oil exploration companies. It is hard to see the synergies in that business model, unless Freeport was ready to admit that the mining boom is dead.

However, in the press release of the deal, Freeport CEO Adkerson wrote, “We will not diminish our focus in our mining operations on safe and efficient production, executing our organic growth projects, prudent capital allocation and an entrepreneurial spirit of creating values for our shareholders.”

So, if mining isn’t dead, then why move into unchartered businesses?

There will probably never be a direct answer from any of the questionable parties. The only thing that can be done now is for Freeport shareholders to step up and ask questions. As a current shareholder, I am not arguing that the deal is terrible and needs to be revoked now, but rather that the executives need to answer these questions to restore the confidence of their loyal shareholders.

Perhaps it is time the SEC steps in and looks at the relationships between these boards? If this deal goes to a vote, I’m voting no with my shares. Other shareholders should consider looking more closely at the deal, and consider if it is in their best interests.

This article was originally written by Matthew Kanterman, and posted on Benzinga.