The Australian mining company, Lynas Corporation Limited (ASX: LYC) recently received an unsolicited proposal from Wesfarmers Limited (ASX: WES) for an acquisition of all the ordinary shares of Lynas at A$2.25 cash per share.
However, after carefully evaluating the Wesfarmers’ proposal, Lynas Board has concluded that it will not engage with Wesfarmers on the terms, which are outlined in the proposal.
While coming to the conclusion of not engaging with Wesfarmers regarding the proposal, the Lynas Board has taken into consideration the company’s extensive knowledge of stakeholder interests and current market conditions in which it operates.
Lynas has a unique business model, whose value is derived from its robust, irreplaceable assets that includes substantial in-house capability and intellectual property which has been created in the last 6 years.
The offer price of A$2.25 cash per share represents a premium of 44.7% to the closing price of 25 March 2019, and a premium of 36.4% to the 60-day weighted average price of Lynas to 25 March 2019.
The proposal is subject to various matters, which includes the completion of due diligence investigations by Wesfarmers and securing regulatory approvals for the transaction. The indicative proposal also requires approval from Lynas shareholders and the Court.
For the half year ended 31 December 2018, Lynas Corporation reported revenue of $179.801 million, down by 10.5% from the previous corresponding period. During the half year period, the company achieved solid results despite facing difficult regulatory and subdued market conditions.
Despite the equipment shutdowns in November 2018 associated with Lynas NEXT and a temporary production halt, the company’s sales volumes increased by 5% in the half year to December 31, 2018, compared to PCP. The company reported gross profit of $46.1 million and net profit after tax (NPAT) was $19.0 million in H1 FY19. As at 31 December 2018, the company had total current assets of $137.145 million and total current liabilities of $42.042 million. At the end of December 2018, the company had cash and cash equivalent of $53.697 million.
Now, let’s have a glance at the company’s stock performance and the return it has posted over the past few months. The stock is trading at a price of $2.145, up by 2.143% during the day’s trade with a market capitalisation of ~$1.4 billion as on 27 March 2019 (AEST 04:00 PM). The counter opened the day at $2.080 and reached the day’s high of $2.165 and touched a day’s low of $2.00 with a daily volume of ~ 21,474,538. The stock has provided a YTD return of 36.81% and also posted returns of 31.25%, 33.76% and 16.67% over the past six months, three and one-month period, respectively. It had a 52-week high price of $2.960 and touched 52 weeks low of $1.480, with an average volume of ~5,048,382.
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