Freeport-McMoRan Copper & Gold Inc said Wednesday it would buy Plains Exploration & Production Co and McMoRan Exploration Co for a total of $9 billion in cash and stock in a major expansion into the energy sector. The deal will also leave Freeport with $20 billion in debt, which scared some investors and sent Freeport shares sliding 13 percent in morning trade. The cost of protecting its debt against default also rose sharply.

"Plains had been deeply undervalued, but on the other hand, Freeport shareholders could have just as easily gone ahead and bought those deeply undervalued shares without paying a hefty premium and without the pleasure of paying a cohort of investment bankers hefty fees," Morningstar analyst Dan Rohr said in an interview.

Copyright Reuters, 2012