Within a week of snaring Cyprus Amax Minerals Co., copper giant Phelps Dodge Corp. said yesterday that it had reached a $1.1 billion buyout deal with Cyprus's former merger partner Asarco Inc., thus clinching a hard-fought three-way merger battle.

The deals, which already have the Justice Department's approval, will make Phelps the world's largest producer of copper, accounting for almost half of global output.

Under its sweetened offer, Phelps will pay $14.75 in cash and 0.2513 shares of its stock--totaling $28.21--for every share of New York-based Asarco. On Sept. 30, Phelps signed a $1.8 billion deal with Cyprus, which had planned to merge with Asarco.

In accepting Phelps's offer, Asarco rejected a higher bid from Grupo Mexico SA--a large copper producer in that country--which has a 10 percent stake in Asarco.

"We believe this transaction represents good value for Asarco shareholders," said Francis R. McAllister, Asarco's chairman and chief executive.

Although Phelps's winning offers for the two companies are substantially higher than its original offers, analysts say the final payout is worth the benefits the union will yield.

The combined entity will have operations in Peru and Chile, besides several locations in the United States. Analysts say the combination also will make Phelps one of the most efficient copper producers.

"It's important that Phelps got Asarco, without which the situation would have been very different," said Daniel Roling, metals analyst at Merrill Lynch Global Securities.

According to Phelps, the three-way merger will immediately add to its cash flow and boost earnings beginning in 2001. The company also expects annual cash cost savings of at least $200 million starting at the end of 2001.

"This compelling three-way combination positions Phelps Dodge to become the leading copper producer," said Douglas C. Yearley, the company's chairman and chief executive.

Copper companies have been under tremendous price pressure because of weak global demand and oversupply. Copper prices, minus inflation, recently dropped to a low for the decade. Analysts say that after the merger, Phelps could become the swing factor, protecting prices by controlling its supply to the market.

"The merger is good for the industry, since it will result in the shutdown of some high-cost units," said Leo Larkin, industry analyst at S&P Equity Group.

The merger agreement allows Asarco shareholders to elect payment in cash or stock, subject to proration to maintain the overall allocation of half stock and half cash. The all-cash election for Asarco shareholders is $29.50 per share; the all-stock election is 0.50266 Phelps shares for every share of Asarco.

On a fully prorated basis, the stock and cash combination involves payment of $14.75 in cash and 0.2513 Phelps shares for each share of Asarco.

Phelps shares fell 56 1/4 cents yesterday to close at $53.