Wesfarmers has provided an update on its proposed $1.5 billion takeover of rare earth-focused company Lynas Corporation.
The former, which was recently pipped by Rio Tinto for the top position in IBISWorld’s 2018 list of Australia’s top 1000 companies, acknowledged that it is “well progressed with the planning of various options to geographically diversify processing, which would address the licence condition”.
Lynas’ request for a renewal of its operating licence at the Lynas Advanced Material Plant (LAMP) near Kuantan, Malaysia had been halted by the Malaysian Government earlier this week due to the company’s disposal of radioactive waste.
Wesfarmers’ offer is subject to Lynas’ continuation of its operational licences in light of “regulatory uncertainty that Lynas has faced for many years”, according to Wesfarmers.
The company offered to purchase Lynas on March 26 for a cash payment of $2.25 a share, a premium of 44.7 per cent on Lynas’ closing price before the announcement and a 36.4 per cent premium on its 60-day weighted average price.
Lynas previously rejected Wesfarmers’ offer, advising its shareholders not to take action in relation to the offer.
“We have opened up the business to other people, and there are other companies willing to acquire Lynas,” said Malaysian Prime Minister Mahathir Mohamad in a press briefing covered by Reuters on April 5.
“They have given us a promise that in the future before sending the raw materials to Malaysia they will clean it up first. They will crack it and decontaminate it in some way with regard to radioactivity.”
Wesfarmers, which has been in talks with the Malaysian Government, denied media speculation that it was attempting to interfere with the government’s processes surrounding Lynas.
“We see the Prime Minister’s statements as a positive step towards the resolution of longstanding regulatory and operating uncertainty for Lynas,” said Wesfarmers managing director Rob Scott.
“With greater clarity around licence renewal and Lynas’ plans to address these licence conditions, Wesfarmers remains open to engage with the Lynas board on our proposal, with a view to progressing a less conditional proposal.”