Phelps Dodge Corp. is staying put in the fight for Asarco Inc., refusing to top the $1.17 billion offer made by Grupo Mexico for Asarco.
New York-based Asarco had agreed Tuesday to be acquired by Phelps Dodge for about $1.1 billion in cash and stock, but on Thursday, Grupo Mexico came back with a higher all-cash offer.
Phelps Dodge had hoped that Asarco would be the third member of a merger with Cyprus Amax Minerals Co. Englewood, Colo.-based Cyprus agreed to sell to Phelps Dodge for $1.8 billion.
Grupo Mexico, which has a 10 percent stake in Asarco, offered $29.50 per share in cash, or $1.17 billion, topping Phelps Dodge's offer by more than 3 percent at the market close on Thursday.
Phelps Dodge called its last offer its best, and denied the Asarco Board of Director's request to submit another offer.
''Phelps Dodge will not raise its offer for Asarco, and we're confident that shareholders of Phelps Dodge and Cyprus Amax will understand and appreciate the financial discipline behind our decision,'' the company said Friday in a released statement.
But John Tuzamos, an analyst with Sanford C. Bernstein, said Phelps Dodge might not be out of the race just yet.
''It may be that Phelps Dodge is taking the tact of waiting to see how strong the financing commitment of Grupo Mexico is,'' Tuzamos said. ''They may just be taking several more days to deliberate.''
But the company could also be protecting itself from financial strain, Tuzamos said.
''They may be afraid that making too high an offer would hurt them too. It's not a clear call,'' he said.
Asarco will pay a $30 million fee if it breaks the Phelps Dodge deal and pursues negotiations with Grupo Mexico, but could pay that fee from the $45 million Cyprus Amax paid Asarco last week for breaking their own two-way merger plan.
In Friday trading on the New York Stock Exchange, shares of Phelps Dodge rose $1.62 1/2 to $56.06 1/4, while shares of Asarco fell 43 3/4 cents to $29.31 1/4.