Grupo Mexico is still studying "strategic alternatives" for its mining units after backing off plans to merge Tucson-based Asarco with Phoenix-based Southern Copper.
"We are going to continue looking for strategic alternatives that better capitalize on the strength of our two subsidiaries," said Grupo Mexico Chief Financial Officer Daniel Muniz. "We do have a corporate structure that has two great companies with a very world-class asset base."
Grupo Mexico's decision not to merge Asarco and Southern Copper - the biggest copper producer in Peru - into a single unit within its mining business came after some shareholders challenged the plan.
Grupo Mexico withdrew its offer "in light of our recent discussions and other developments," it said in a letter Friday to Southern Copper, which didn't provide further details.
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Grupo Mexico, the owner of 81 percent of Southern Copper, had offered investors 1.237 shares of its Americas unit for each Southern Copper share in July 2010.
Grupo Mexico, based in Mexico City, had sought the merger to save costs after it regained control of bankrupt Asarco in 2009, and had expected to complete the transaction in the first half of this year.
A month after the merger was proposed Southern Copper was sued by a pension fund, claiming the offer from Grupo Mexico didn't properly compensate investors.
"We think the decision is lightly negative for Grupo Mexico," Alexander Hacking, an analyst for New York-based Citigroup, wrote Monday in a note to clients.
Combining the units would have placed all Grupo Mexico's mining operations, including Asarco and Southern, into one publicly traded company, allowing investors to value that separately from Grupo Mexico's railroad and oil-drilling units.
As of Monday, Grupo Mexico's stake in Southern Copper was worth about $20.8 billion, or 5.2 percent less than the company's own market value of $21.9 billion.
DID YOU KNOW?
Tucson-based Asarco is Southern Arizona's 20th-largest employer, with 2,262 full-time-equivalent workers at the start of this year, the Star 200 survey shows. In Southern Arizona, the company operates the Mission Mine near Sahuarita, the Silver Bell Mine near Marana, the Ray Mine near Kearny and a smelter at Hayden.