Cloud with a Copper Lining

Dec 1, 2004

In a stock-for-stock deal that turned into Mexico's second-biggest merger ever, the country's largest mining company has joined Peru's top miner.

After a rough couple of years, Grupo México is improving its financial profile with a $4 billion deal that gives investors a more tempting opening into the world's second-largest copper reserves.

Grupo México, headed by the reclusive Germán Larrea, announced at the end of October terms of the long-anticipated merger of its subsidiaries, Southern Peru Copper Corp. (SPCC) and Minera México. The deal improves Grupo México's finances and bolsters the groups' copper reserves at a time when prices are high. The merger will enable Grupo México to reduce leverage and operating costs. Grupo México had $2.44 billion in gross debt and a leverage ratio of 87% at the end of the September quarter. In contrast, SPCC's leverage was 23%.

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