Wesfarmers makes surprise AU$1.5bn bid for rare-earths miner Lynas

Australian conglomerate Wesfarmers has made a takeover bid for rare-earths miner Lynas Corporation at AU$2.25 a share, a 44.7% premium on its last closing price on the Australian Securities Exchange (ASX).

According to Sydney Morning Herald, this equates to around $1.5bn for what is one of the few rare-earth mining companies outside China.

Lynas mines neodymium and praseodymium (NdPr) – permanently magnetic rare-earths that have become a necessity in electric vehicle (EV) motor production – which are becoming increasingly sought-after as EVs achieve exponentially greater consumer success and production rates ramp up.

With the growth of the EV market set to expand worldwide as consumers transition away from fossil fuel-powered vehicles, and the scarcity of firms that mine NdPr, Lynas represents a lucrative and future-ready acquisition option for Wesfarmers.

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In its statement, Wesfarmers said it is ideally placed to drive Lynas’ continued success through the strength of its capital investment capabilities.

“An investment in Lynas leverages our unique assets and capabilities, including in chemical processing, and will deliver Lynas’ shareholders with an attractive premium and certain cash return,” said Rob Scott, Wesfarmers Managing Director, in the press release.

“We also acknowledge the importance of the Lynas Advanced Materials Plant in Malaysia and the strong contribution made by Lynas’ management team and its employees across all operations. We expect Lynas’ employees to continue to play an important role in taking the company forward.”

The bid is conditional on a range of factors, including: Wesfarmers’ completion of due diligence investigations; regulatory approval; confirmation that certain operating licences will remain effective for a satisfactory period following the potential purchase; and negotiation between the two firms’ Boards.