Wesfarmers’ hunt for access to metals needed for electric vehicles (EVs) has accelerated with a $776 million takeover offer for Australian lithium company, Kidman Resources.
The proposed acquisition would give Wesfarmers control of Kidman’s 50 per cent stake in the Mt Holland lithium project in Western Australia.
Mt Holland is also 50 per cent owned by leading global lithium producer, Sociedad Quimica y Minera de Chile S.A. (SQM).
Wesfarmers has offered Kidman $1.90 cash per share by way of a scheme of arrangement, a 47.3 per cent premium on the target’s May 1 closing price.
The bid for Kidman follows Wesfarmers’ hostile $1.5 billion offer for rare earths miner Lynas Corporation in March. The deal for Lynas stalled, however, after the target rejected the bid.
Wesfarmers’ proposed acquisition of Kidman already looks more promising than the Lynas bid, with the lithium company’s board backing the offer and concluding that “it is in the best interests” of shareholders.
Kidman’s major shareholders, board members and key management, which together own around 17 per cent of its shares, have indicated they will support the bid.
Wesfarmers managing director Rob Scott said the proposed acquisition of Kidman would provide an attractive investment in a project that would benefit the global uptake of EVs.
He added the acquisition would draw upon the ability of the company’s chemicals, energy and fertilisers business to design, construct, commission and operate complex chemical plants.
“The proposed acquisition is consistent with our objective of deploying capital in areas where we can deliver attractive returns to our shareholders by leveraging our existing strengths and capabilities,” Scott said.
“It will underpin the development of the Mt Holland lithium project and deliver Kidman’s shareholders an attractive premium and certain cash return.”
The Mt Holland project includes the development of a mine, concentrator and refinery that have been designed to produce approximately 45,000 tonnes a year of battery-grade lithium hydroxide for supply to the EV market.
SQM chief executive officer Ricardo Ramos welcomed Wesfarmers’ proposed acquisition of Kidman and investment in the Mt Holland lithium project.
“Wesfarmers has significant local infrastructure, experience and capability in chemical processing that will be ideally suited to the ongoing development of the Mt Holland lithium project,” Ramos said.
Scott said an acquisition of Kidman would create a unique partnership with SQM, a company with a long operating history and deep market knowledge of the lithium industry.
“In partnership with SQM, we will support the development of an integrated, world-class lithium operation in Western Australia, bringing significant investment, jobs and technical expertise to the state,” Scott said.
Kidman has granted Wesfarmers an exclusivity period until May 29 to complete due diligence on the deal.