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Business deals

Australia's Wesfarmers makes $1bn bid for rare-earths miner

Conglomerate is offering 45% premium for Lynas, supplier based outside of China

Lynas has clashed with Malaysian regulators over its rare-earths processing plant in the country.   © Reuters

SYDNEY -- Australian group Wesfarmers announced an offer Tuesday to acquire compatriot Lynas, one of the few non-Chinese suppliers of rare earths, returning to a purchase mode after a spate of recent asset disposals.

The bid, which Lynas said was unsolicited, is worth 1.5 billion Australian dollars ($1.06 billion), according to local media. This represents a 45% premium over the miner's last closing price. Lynas said it is "assessing" the proposal.

Wesfarmers, whose portfolio ranges from chemicals to retail, has been undergoing restructuring, including exiting the coal business in December amid dim growth prospects. The group hopes that rare earths -- which are widely used in autos, home electronics and the energy industry -- will be more profitable.

"An investment in Lynas leverages our unique assets and capabilities, including in chemical processing," said Wesfarmers Managing Director Rob Scott.

Lynas reported A$53.4 million in pretax income on revenue of A$374.1 million for the fiscal year through June 2018. The miner is butting heads with the Malaysian government over relicensing related to the company's processing plant in the country, an issue that has dented its shares.

The Wesfarmers proposal said any transaction is subject to "ensuring that relevant operating licenses in Malaysia are in force and will remain in force for a satisfactory period."

Japan's Sojitz and Japan Oil, Gas and Metals National Corp. are the senior lenders to Lynas, and they own 0.3% of the miner through a special-purpose company. Lynas supplies about 30% of the rare-earth products consumed by Japan, according to Sojitz.

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