UPDATE 1-Southern shareholder seeks to block Asarco merger

* Seeks to block Southern-Asarco merger proposal

* Shareholder says deal overvalues Asarco
(Updates with analyst, Grupo Mexico comment)

WILMINGTON, Del., Aug 17 (BestGrowthStock) – A shareholder of
Southern Copper Corp (SCCO.N: ) has sued to block a proposed
merger with Asarco claiming they are being shortchanged by
Grupo Mexico, the majority owner of both companies, according
to court documents.

In a complaint filed on Monday in Delaware’s Chancery Court
against Southern’s board, the Oklahoma Firefighters Pension &
Retirement System said the proposed transaction “grossly
overvalued” Asarco at a $5.9 billion.

The firefighters also protested that Grupo Mexico, which
owns 80 percent of Southern, is not seeking approval of
minority shareholders. The complaint seeks class action
status.

Grupo Mexico said it had not been notified of the suit.

In July, Grupo Mexico (GMEXICOB.MX: ) said it would combine
its Arizona-based Asarco business with Southern’s Latin
American mining operation to cut costs. It also said Southern’s
shareholders would benefit by gaining exposure to Asarco’s
growth potential. [ID:nN23180836]

The lawsuit asks the court to block the proposed
Southern-Asarco transaction unless Southern sets up an
independent committee to negotiate on behalf of minority
shareholders and put the deal to a vote of minority
shareholders.

The Mexican mining and transportation company regained
control of Asarco last year by paying more than $2.5 billion to
bring it out of bankruptcy.

Rodrigo Heredia, an analyst who covers Grupo Mexico at IXE
brokerage in Mexico, said it was unclear if one shareholder
could block the merger plan.

He said long-term benefits could come to shareholders if
Asarco makes new copper discoveries, although there maybe some
dispute on the initial valuation of the company.

Grupo Mexico originally acquired Asarco in 1999 in a
leveraged buyout. Asarco was the majority stockholder of
Southern at the time, although Grupo Mexico split the two to
protect Southern from Asarco’s creditors, a deal that was found
to be fraudulent during Asarco’s bankruptcy.

The shareholder said the deal is aimed at snuffing out an
ongoing lawsuit stemming from another Grupo Mexico-backed deal,
the 2005 acquisition of “debt-ridden” Minera Mexico by
“cash-rich” Southern. The complaint said that deal caused more
than $1 billion of damages to Southern.

Attorneys for the shareholder did not return calls for
comment.

On Tuesday, shares of Southern were up 2.16 percent at
$30.28 on the New York Stock Exchange and shares of Grupo
Mexico were up 2.48 percent to close at 34.24 pesos on the
Mexican exchange.

The case is In re Oklahoma Firefighters Pension &
Retirement System, v. German Larrea Mota-Velasco et al, Court
of Chancery, State of Delaware, No. 5729.
(Reporting by Tom Hals, additional reporting by Mica Rosenberg
in Mexico City and Emily Chasan in New York; editing by Sofina
Mirza-Reid)

UPDATE 1-Southern shareholder seeks to block Asarco merger