An investor of Southern Copper Corporation (USA) (NYSE:SCCO) filed a lawsuit in State Court against Southern Copper's board of director in effort to block a proposed merger between Southern Copper and Asarco claiming SCCO shareholders are being shortchanged by Grupo Mexico, the majority owner of both companies.
Southern Copper Corporation, located in Phoenix, Arizona, is an integrated copper producer. The Company produces copper, molybdenum, zinc and silver. In 1999 Grupo Mexico originally acquired Asarco, which was the majority stockholder of Southern Copper at that time. In 2005 Asarco filed for Chapter 11 bankruptcy and Southern Copper Corp. acquired Minera Mexico. Last year Grupo Mexico Grupo Mexico paid more than $2.5 billion to regain control of Asarco and pulled the U.S. miner out of bankruptcy. Then on Friday, July 23, 2010, Mexico's Grupo Mexico (GMEXICOB.MX) said it planned to combine its Asarco with its Latin American mining operation to cut costs. Under the plan, Southern Copper shareholders would exchange each stock Southern Copper share for 1.237 shares in Americas Mining Corporation, a Grupo Mexico subsidiary controlling Asarco. After the merger, Southern Copper's minority shareholders would have a 17-percent stake in Americas Mining Corporation and the rest would be owned by Grupo Mexico.

The plaintiff asked the court to block the proposed Southern Copper-Asarco transaction. According to the complaint the plaintiff claims that the proposal “is not entirely fair to Southern Copper’s minority shareholders” and the deal is aimed to eliminate an ongoing lawsuit concerning the 2005 Grupo Mexico-backed acquisition of debt-ridden Minera Mexico by cash-rich Southern Copper Corp. The complaint said that deal caused more than $1 billion of damages to Southern Copper.

Southern Copper Corporation (USA) (NYSE:SCCO) shares recently traded at $30.05 per share, down from its current 52weekHigh of $36.98 per share.