Wesfarmers offers A$776m for miner Kidman

Australian retail conglomerate Wesfarmers Ltd offered A$776 million (RM2.25 billion) to buy lithium miner Kidman Resources Ltd yesterday, its second bid in two months to deepen its exposure to high-tech minerals.

The offer, which has the backing of Kidman’s board and major shareholders, was pitched at a 47 per cent premium to Kidman’s last closing price and the stock soared to just below the A$1.90 offer price at the start of trade.

For Wesfarmers, which last year sold out of coal mining and in March bid A$1.5 billion for rare-earth producer Lynas Corp Ltd, it is its firmest bet yet on future demand for raw materials behind products from electric cars to wind turbines.

The push comes as Wesfarmers is looking to diversify beyond the retail businesses that dominate its portfolio as a housing downturn in Australia weighs on spending and is seen hitting its successful hardware business particularly hard.

“Once again Wesfarmers are at the front of the curve as it deploys its funds from the sale of coal assets and grocery business into the new frontier of electric vehicles,” said James McGlew, executive director of corporate stockbroking at Perth broker Argonaut and a Wesfarmers shareholder.

Wesfarmers shares edged down 0.3 per cent, as the broader market fell.

“We are really happy with the deal,” said Joe Belladonna, chief financial officer of Kidman’s biggest shareholder, Western Areas, adding that Wesfarmers’ large balance sheet would support the development of its Mt Holland lithium project.

Under Rob Scott, who took over as Wesfarmers’ managing director in 2017, the firm has made the biggest overhaul of its portfolio in a decade, quitting coal and spinning out its slow-growth supermarket group, Coles, to seek better returns elsewhere.