Lynas Corporation’s board of management has urged shareholders not to accept Wesfarmers’ “unsolicited” $1.5 billion bid for the company announced last month.
This represents another step away from the offer following Lynas’ decision not to engage with Wesfarmers on the terms outlined in its initial proposal in March 2019.
Lynas considered Wesfarmers’ bid opportunistic amid stock price fluctuations which were fuelled by waste disposal issues at its rare earth processing plant near Kuantan, Malaysia.
The takeover target is currently trying to secure an operating licence renewal from the Malaysian Government for its Lynas Advanced Material Plant (LAMP) by September 2019, which is at risk due to the buildup of toxic and radioactive landfill waste at the plant.
The Malaysian Government has ordered Lynas to clean up 450,000 tonnes of the waste by September 2 as a condition of the renewal.
According to Malaysian Prime Minister Mohathir Mohamad, Lynas had “given us a promise that in the future, before sending the raw materials to Malaysia, they will clean it up first.”
Lynas also operates the Mt Weld central lanthanide rare earth deposit in Western Australia, from which material is sent to the LAMP site in Malaysia for processing.
The company, in acknowledging the media scrutiny surrounding the Wesfarmers bid said in an ASX statement, “We would like to acknowledge the feedback received from many shareholders that they are surprised and disappointed with the reported conduct of Wesfarmers, in particular, their decision to engage with the Malaysian government at a time of sensitive and complex regulatory negotiations.
“There has been a lot of media attention because of the way this unsolicited, non-binding, highly conditional proposal has been progressed by Wesfarmers.
“We expect this to continue and we will continue to pout our case forward strongly on [shareholders’] behalf.”