Plains CEO urges shareholders to back Freeport deal


The chief executive of Plains Exploration & Production Co urged shareholders on Monday to vote in favor of Freeport McMoRan Copper & Gold Inc's proposed takeover of the energy company.

The open letter from CEO James Flores follows recommendations by two proxy advisory firms, ISS and Glass Lewis & Co, that shareholders vote against the $6 billion deal, arguing that it undervalues the oil and gas company.

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Freeport said on Thursday that it does not plan to raise its offer, which values each Plains share at $25 plus 0.6531 of its common stock, calling the terms of the friendly deal "best and final.

In December, copper miner Freeport announced plans to buy Plains as well as another oil and gas company, McMoRan Exploration Co , aiming to diversify into the U.S. energy sector in a hedge against copper's uncertain outlook.

Flores said in his letter to shareholders that as result of the takeover the combined company would be stronger and better positioned to develop future projects.

Flores stands to gain some $150 million if the deal goes through, and he would earn a base salary for running Freeport's new oil and gas business that would equal or exceed those of Freeport's Chairman Jim Bob Moffett and Chief Executive Richard Adkerson.

Both Adkerson and Moffett received $18.45 million in total direct compensation in 2011, including their base salaries of $2.5 million, according to Freeport's proxy statement.

The two oil and gas takeovers will transform Freeport into the largest U.S.-based diversified natural resource company. The combined company will have good access to debt markets, increased cash flows and lower cost of capital investment on future growth, Flores said.

Plains shareholders are set to vote on the deal on May 20.

Shares of Plains fell 0.58 percent to $44.78 on Monday on the New York Stock Exchange, while Freeport's stock was down 2.46 percent at $31.75.

(Reporting by Julie Gordon; Editing by Leslie Gevirtz)