Wesfarmers has set its sights on Lynas Corporation with a $1.5 billion takeover bid.
Lynas’ owns the Mt Weld rare earths operation in Western Australia. The company also operates the Malaysia-based Lynas Advanced Materials Plant (LAMP), which has been the focus of environmental activists in the South-East Asian country.
Wesfarmers claims 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 suitor also believes it offers 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.
Under the non-binding, indicative 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’ last closing price and a 36.4 per cent premium on the target’s 60-day weighted average price.
Wesfarmers managing director Rob Scott said an investment in Lynas leveraged the company’s unique assets and capabilities, including in chemical processing.
“We also acknowledge the importance of the Lynas Advanced Materials Plant in Malaysia and the strong contribution made by Lynas’ management teams and its employees across all operations,” Scott said.
“We expect Lynas’ employees to continue to play an important role in taking the company forward.”
If successful, the acquisition would be the first for Wesfarmers since its exit from the coal industry and the demerger of Coles.
Lynas has advised its shareholders that they do not need to take action in relation to the indicative proposal.
“The indicative proposal is unsolicited. In addition, the indicative proposal is highly conditional, indicative and non-binding,” a Lynas announcement from chairman Mike Harding stated.
“Lynas is assessing the indicative proposal and will release information as soon as possible.”
The deal is conditional on Wesfarmers entering into a binding implementation agreement with Lynas, due diligence and regulatory approvals.