Because of a typographical error, a story in Wednesday's Washington Post incorrectly stated that the Newmont Mining Corp. would get a 12 per cent share of the new Peabody Holding Company, which will acquire the Peabody Coal Co. from Kennecott Copper Corp., under a Federal Trade Commission order.Newmont will get a 30 per cent share will be reduced to 27.5 per cent before the transaction is completed.
The Federal Trade Commission yesterday approved Kennecott Copper Corp.'s plan to sell Peabody Coal Co. for $1.2 billion in one of the largest government-ordered divestitures on record.
The FTC's approval of the transaction required under the terms of its 1971 ruling that Kennecott's 1968 acquisition of Peabody, the nation's largest coal producer, violated the antitrust laws.
Under the plan, Kennecott will divest itself of Peabody's domestic operations to a consortium of some of the largest corporations in the world.
Newmont Mining Corp., which will get a 12 per cent share of the new holding company, is a major minerals and metals extractor whole sales totaled $605 million last year.
The Williams Cos., which also will get a 30 per cent share, is a diversified company engaged primarily in agriculture, chemicals, and energy. Its sales totaled $881 million last year.
Bechtel Corp., which gets 15 per cent, is an international construction and engineering conglomerate whose 1976 sales were more than $2.6 billion.
The Boeing Co., also with a 15 per cent share, is a large aerospace firm, which had 1976 sales of $37 billion.
Fluor Corp., with 10 per cent of the new holding company, is a conglomerate whose activities parallel Bechtel's and whose 1976 sales totaled more than $1.3 billion.
Under the plan, The Equitable Life Assurance Society of the United States, the nation's third largest life insurance company, will acquire 5 per cent of the stock in Peabody prior to closing, which will reduce Newmont's and Williams' interests in the holding company to 27.5 per cent.
The price tag for the domestic operations is $1.1 billion in cash and securities. Also under the plan, Peabody's Australian operations will be sold to Dampier Mining Co., Ltd., for $100 million cash.
Kennecott has been udner order to divest itself of Peabody since 1971, when the FTC ruled that Kennecott, the nation's top copper producer, intended to enter the coal business in a significant way and had the capacity to become a substantial competitor, but had removed itself from that role by buying Peabody, thus eliminating potential competition between the two and violating the law.
Kennecott waged an intensive battle to keep Peabody - even after the Supreme Court turned down its petition for appeal in 1974, finding reasons several times to take the case back to court and to the commission. It appeared to give up only last summer, when the FTC asked a federal appeals court to fine Kennecott $100,00 a day until it compiled with the FTC order, and when another of its motions for a modified order was rejected by the courts.
Frank R. Milliken, Kennecott's president, yesterday said the giant copper company would proceed "as expeditiously as possible to consummate the sale." Although the sale agreements call for closing within 30 days after FTC approval, it could be complicated by a penind stockholder suit regarding the Peabody transaction.
Milliken said the sale would leave the firm "free once more to devote our ful energy and attention to the growth and diversification of Kennecott's earnings base." Some Wall Street analysts believe that, with the completion of the Peabody sale, Kennecott may be a target for takeover.
Although yesterday's FTC decision appears to close a nine-year saga, the end result also has raised questions about the inherent difficulties of the divestiture process after lengthy litigation that is, finding a way to restore an illegally acquired compnay as "a going concern and effective competitor" as the FTC mandates.
Since the FTC brought its case and ordered the divestiture, the coal industry and Peabody have changed. In addition, far more attention is being paid in this energy-consciou era to the question of whether holders of significant assets in one energy source, like oil, should own assets in another.
Some antitrust lawyers have questioned whether some of the consortium members themselves couldn't be "potential entrants" on their own into the coal business and that their control of Peabody's assets might not be just as anticompetitive as having these assets in Kennecott's control.