Wesfarmers makes $1.5bn bid for Lynas Corporation
Lynas shares shot up by as much as 40pc as the rare earth miner assesses a $1.5bn takeover offer from Wesfarmers.
Wesfarmers has made a $1.5 billion cash bid for Australian rare earths miner Lynas.
The move is its first proposed acquisition since spinning off retailer Coles and quitting its coal assets.
The Perth-headquartered conglomerate said it was well placed to support Lynas through capital investment, which it said could support downstream processing assets and realise the full potential of its Mt Weld ore body in Western Australia.
“An investment in Lynas leverages our unique assets and capabilities, including in chemical processing, and will deliver Lynas’ shareholders with an attractive premium and certain cash return,” said Wesfarmers managing director Rob Scott.
Wesfarmers also acknowledged the importance of Lynas’s advanced materials plant in Malaysia “and the strong contribution made by Lynas’ management team and its employees across all operations”.
“We expect Lynas’ employees to continue to play an important role in taking the company forward.”
Lynas said it was assessing Wesfarmers’ offer and said shareholders need not take any action.
It described the unsolicited offer as “highly conditional, indicative and non-bind”.
Under the proposal Wesfarmers would pay $2.25 cash for each share in Lynas, the world’s largest rare earths producer outside of China.
That price is a 44.7 per cent premium to the company’s closing share price yesterday of $1.56 a share.
up 34 pc high at $2.09c as much as 40pc
Emerging from a trading halt, Lynas shares shot up as much as 40 per cent and by 1.20pm were up 34 per cent at $2.09.
Wesfarmers shares slipped by 3.31 per cent, or $1.16, to $33.87 by 11.30am, dipping back below the $34.01 price shortly before the Coles demerger in November.
Wesfarmers cautioned there was no certainty the proposal will lead to an agreed transaction.
Rare earths are used to make batteries and other electronic items, including micro-motors for computers and servers’ hard disks, as well as acoustic devices including earphones and speakers.
Announcing the offer this morning, Wesfarmers touted its mining and chemical processing expertise and said it had a track record of working well with diverse government and other stakeholders to deliver positive outcomes for local communities.
The proposal is conditional on Wesfarmers’ due diligence and the negotiation of the agreement between both parties.
The deal would also be subject to ensuring relevant operating licences in Malaysia are in force, and that regulatory and court approvals for the transaction are met.
The announcement comes after Lynas said on February 28 it would be forced to shut down its Malaysian processing facility as the company faced a regulatory roadblock, exacerbated by soft market prices for rare earths.
In December, Malaysian regulators announced rules requiring the export of water leach purification residue from the plant. Lynas appealed the decision, saying that meeting the new conditions was “unachievable”.
Wesfarmers was left with a multi-billion war chest after a series of assets sales, including the
demerger of Coles and its exit from the coal sector.
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