Freeport-McMoran Case - 1.Why do you think JPMorgan and...

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1.Why do you think JPMorgan and Merrill Lynch were selected to underwrite and book-run all $23.3 billion in financings (all debt, common stock, and convertible), instead of sharing the underwriting with additional firms? JP Morgan and Merrill Lynch were selected to underwrite all $23.3 billion in financings because as mentioned in the case, FCX had well established ties to JP and Merrill Lynch and trusted them for both M&A advisory and underwriting responsibilities. Furthermore, FCX saw that banks like JP Morgan and Merrill Lynch were two of the biggest players in the leveraged-loan business (Exhibit C3.1) and had a solid record in M&A financings in the past. In addition, another reason they were selected is that JP Morgan and Merrill Lynch combined to a $6 billion bridge loan prior to the merger approval and agreed to underwrite the entire $17.5 billion in debt financing. 2. What was the role of the leveraged finance group at JPMorgan and why was its involvement important to the acquisition? The leveraged finance group at JP Morgan was responsible for the analysis behind making the bridge financing commitment to FCX. This was never drawn out because JP Morgan was successful in placing high-yield notes with institutional investors. The bridge financing was important for the acquisition because it enabled FCX to show committed financing to Phelps Dodge. In addition, the leveraged finance group had to analyze
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