Cashed-up Wesfarmers to buy Kidman for $776M

Cashed-up Wesfarmers to buy Kidman for $776M

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).

Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.

Business News Australia

Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support

Does your pay structure answer today's challenges?
Partner Content
If you are not reassessing how your organisation remunerates and rewards employees as a...
Aon
Advertisement

Related Stories

Webjet buys Trip Ninja as bookings rebound on travel sector recovery

Webjet buys Trip Ninja as bookings rebound on travel sector recovery

Webjet (ASX: WEB) has today announced the acquisition of Canadian t...

Crown Resorts receives third takeover offer from Blackstone

Crown Resorts receives third takeover offer from Blackstone

US-based investment management company Blackstone has launched its ...

Treasury Wine Estates to buy Californian luxury winemaker for $433m

Treasury Wine Estates to buy Californian luxury winemaker for $433m

After harvesting net proceeds of $300 million from divesting non-pr...

Australian Clinical Labs to acquire Medlab Pathology for $70m

Australian Clinical Labs to acquire Medlab Pathology for $70m

Australian Clinical Labs (ASX: ACL) is set to nearly double its num...