Grupo Mexico wins Asarco
Judge rules against Sterlite bid for copper firm
Tom Stundza -- Purchasing, 11/15/2009 10:00:52 PM
Grupo Mexico, the world's third-largest copper producer, has won a federal court ruling that barring appeals will give it control of Asarco, the Tucson, Ariz., copper company. As has been reported, it's been a year-long batter over ownership. Mexico City-based Grupo Mexico and Mumbai, India-based Sterlite, a subsidiary of London-based Vedanta Resources, have been fighting to buy Asarco's assets out of bankruptcy. Assets include three copper mines and a smelter in southern Arizona.
U.S. District Judge Andrew Hanen in Brownsville, Texas, affirmed on Friday the August decision of a U.S. bankruptcy court to pick Grupo Mexico's $2.4 billion bid over a $2.5 billion bid by India's Vedanta Resources. Asarco management and the United Steelworkers union had backed Vedanta's bid.
Asarco, founded in 1899 as American Smelting & Refining Co. and formerly based in New York City, filed to reorganize under Chapter 11 of federal bankruptcy law in 2005. The filings resulted from litigation involving Asarco's former asbestos operations.
The Arizona Republic newspaper says Asarco has become an attractive acquisition target because of its healthy financial performance since entering bankruptcy. In less than four years, Asarco has raked in $5.6 billion in revenue and earned $623.4 million in net income, according to a financial report filed in U.S. Bankruptcy Court in Texas.
Both Grupo and Sterlite filed reorganization plans for Asarco in bankruptcy court that propose how to pay back the copper miner's creditors. Bankruptcy Judge Richard Schmidt in August concluded both plans are acceptable but recommended Grupo Mexico's for federal court confirmation because he determined the Mexican miner was more likely to pay back creditors in full.
This was reaffirmed by Judge Hanen, who also has ordered Grupo Mexico to present a new contract proposal to the United Steelworkers, the union that represents 1,700 of Asarco's 2,500 workers.
Now Playing: 
