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Wesfarmers share price: Wesfarmers makes $1.1 billion bid for Lynas

Wesfarmers have made a A$1.5 billion takeover offer for Lynas on Tuesday morning. A near 45% premium to Lynas’ last traded price.

Australian retail giant Wesfarmers has announced it has bid to acquire niche rare earths miner Lynas for A$1.50 billion.

The strategic approach from Wesfarmers opens opportunity to obtain Lynas in Western Australia. Which is also the world’s sole producer of rare earths outside of China.

Wesfarmers also operates home improvement depot Bunnings, and recently spun off supermarket chain Coles group.

‘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.’ Wesfarmers said in an announcement.

Lynas' share price near 18-month lows on licence issues

Westfarmers made an offer of A$2.25 per Lynas share, a near 45% premium to the miner's closing share price.

It comes as Lynas shares were at near 18-month lows after facing difficulties over environmental licences in Malaysia, where its chemicals plant is located.

Wesfarmer’s proposal is dependent on Lynas having relevant operating licences in Malaysia for satisfactory periods after the deal is closed.

Analysts expect more bidders to emerge

Analysts say the price is too low and expect other bidders to likely pay more.

Wesfarmers share price

Wesfarmers shares fells to their lowest in 1 month after announcing the takeover bid for Lynas.

Wesfarmers shares fell 3.6% to A$33.76, marking their biggest intraday percentage fall since February this year.

The Wesfarmers stock has hit its lowest since March 6 on Tuesday, making it the top percentage loser on the benchmark S&P ASX200 index, at time of writing.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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