Lynas Corporation plans to make Wesfarmers work for a takeover of the rare earths company.
Wesfarmers unveiled a hostile $1.5 billion bid for Lynas yesterday that would give it access to the company’s rare earths assets in Australia and Malaysia if successful.
Lynas, after evaluating the non-binding offer, decided it would not engage with Wesfarmers on the terms outlined in the “indicative and highly conditional proposal.”
“In coming to this conclusion, the board has drawn on the company’s extensive knowledge of stakeholder interests, and current market and operating conditions,” Lynas today stated in an ASX announcement.
“It has also consulted with its advisers on the terms of the proposal, and validated its view as to value.”
Lynas believes the company is unique and its value is derived from strong, irreplaceable assets, including a unique position as the only rare earths miner and processor outside of China.
The company operates the high-grade Mt Weld rare earths mine in Western Australia.
“Shareholders do not need to take any action in relation to the indicative proposal,” Lynas added.
Under the proposal, Wesfarmers would acquire Lynas through a scheme of arrangement for $2.25 a share in cash.
The proposal is a 44.7 per cent premium on Lynas’ closing price on Monday and a 36.4 per cent premium on the target’s 60-day weighted average price.
Wesfarmers yesterday backed the offer by saying it is uniquely placed to support Lynas’ future through further capital investment to support downstream processing assets and realise the full potential of the Mt Weld orebody.
The diversified company added it would offer highly complementary mining and chemical processing expertise, as well as a track record of working well with diverse governments and other stakeholders to deliver sustainable, positive outcomes for local communities.