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Two months ago, Wesfarmers' (ASX: WES) 1.5 billion acquisition of rare earths miner Lynas (ASX: LYN) was shot down, but the failed takeover evidently didn't deter the loaded conglomerate's thirst for resources.
Wesfarmers has now entered a scheme implementation deed (SID) to acquire Kidman Resources for $1.90 per share, valuing the company at $776 million.
The offer represents a significant premium of 47.3 per cent to Kidman's last closing price on 1 May 2019.
The Kidman board has unanimously recommended to its shareholders that they vote in favour of the scheme.
Wesfarmers has already completed its due diligence and satisfied all necessary conditions for the transaction to take place.
Managing director of Wesfarmers Rob Scott says the SID agreement with Kidman is a significant step towards acquisition.
"This is an important milestone in advancing a transaction that provides Wesfarmers with an attractive investment and delivers Kidman shareholders with a compelling premium and certain cash return," says Scott.
Over the past three weeks Wesfarmers has worked with Kidman and its Mt Holland joint venture company, Covalent Lithium, to complete due diligence.
The process confirmed that a potential acquisition of Kidman would launch the company into large-scale lithium works in Western Australia.
Wesfarmers has developed its own plan as to the development of Mt Holland and intends to widen the scope of the project after its likely acquisition of Kidman.
Wesfarmers expects to lay out $700 million in capital on developing the project.
Last year, Wesfarmers sold its shares in Coles (ASX: COL) following the supermarket chain's spin-off IPO.
WES shares are currently trading at $37.37, up a slight 0.6 per cent at the time of writing (11:27am AEST).
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