Freeport-McMoRan Inc. agreed to pay $137.5 million to resolve investor lawsuits alleging executives of the largest publicly traded copper producer had conflicts that tainted the 2012 buyouts of two oil and natural gas companies.
The settlement resolves claims Phoenix-based Freeport-McMoRan overpaid McMoRan Exploration Co. and Plains Exploration & Production Co. because of executives' and directors' conflicts of interests in the deals, according to filings in Delaware Chancery Court. Freeport-McMoRan paid $9 billion for the two companies.
The $4 billion State-Boston Retirement System; $1.4 billion Jacksonville (Fla.) Police and Fire Pension Fund; Dauphin County Employee Retirement Trust Fund, Harrisburg, Pa.; Roseville (Mich.) Employees' Retirement System; Amalgamated Bank; and other Freeport shareholders objected in the lawsuit that investors were denied the right to an approval vote on the buyout. Freeport shareholders will receive money from the settlement in the form of a special dividend, according to court filings outlining the accord.
The accord “returns value directly to the shareholders who were denied the opportunity to vote on these deals,” Keith Mestrich, President and CEO of Amalgamated Bank, said in a statement.
Eric Kinneberg, a Freeport spokesman, said the settlement of the investors' derivative suits will be covered by insurance on the company's officers and directors.
Freeport officials “deny all allegations of wrongdoing and fault and believe that they acted properly at all times,” Mr. Kinneberg said in an e-mailed statement.
Disgruntled investors alleged Freeport executives concocted the buyouts to benefit themselves and had conflicting interests that called the deals into question.