Wesfarmers has walked away from its $1.5 billion takeover offer for Lynas Corporation.
Initially, Wesfarmers proposed to acquire Lynas for $2.25 a share, an offer that was swiftly rejected by the target’s board.
Even though Lynas has been granted permission to continue operating in Malaysia, a key condition of the deal, Wesfarmers has decided not to proceed with the proposal following the backlash.
Wesfarmers managing director Rob Scott said, “Wesfarmers remains focussed on delivering value to its shareholders through disciplined capital allocation within our division and when considering new investments.”
Lynas is the largest producer of rare earth minerals outside of China, accounting for 13 per cent of global supply.
The conditions of the licence renewal include relocating its cracking and leaching processes to Western Australia within four years.
The company’s licence extension has been met with controversy. Environmental activists have opposed the licence renewal due to concerns regarding radioactive waste.
According to ABC News, the Prime Minister of Malaysia Mahathir Mohamad dismissed the claims.
“It’s not Chernobyl. This isn’t going to be dangerous,” Mohamad said.
In a previous statement, Lynas chief executive Amanda Lacaze said the company spent more than $200 million in the local economy each year, with Malaysian staff making up 97 per cent of its operations in Malaysia.
Lynas also operates the Mt Weld rare earths operation in Western Australia.