UPDATE 7-Freeport makes $9 bln energy bet; Wall Street pans deal

Wed Dec 5, 2012 4:29pm EST
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* Freeport to pay $6.9 bln for Plains, $2.1 bln for McMoRan

* Deals allow Freeport to diversify into U.S. oil, gas

* Three-quarters of 2013 earnings to come from mining

* Freeport shares sink amid deal concerns

By Michael Erman and Julie Gordon

Dec 5 (Reuters) - Freeport-McMoRan Copper & Gold Inc struck a deal to buy Plains Exploration & Production Co and McMoRan Exploration Co for $9 billion in a bold bid to diversify into the U.S. energy sector as copper's prospects wane.

But Freeport's shares tumbled 16 percent, and the cost of protecting its debt against default soared, as investors and analysts slammed the move as unnecessary.

The deal also means a huge windfall for the top executives involved. McMoRan Chairman Jim Bob Moffett could collect $73 million cash for his shares, while Plains Chief Executive Jim Flores stands to get $65.4 million for his. Flores is also in line for a change-in-control payout of as much as $150 million.

On paper the deal reshapes Freeport, which is one of the world's largest copper miners and is concentrated outside the United States. Plains and McMoRan are concentrated in energy plays in California, Texas and the Gulf of Mexico.   Continued...