SINGAPORE: Wesfarmers Limited has entered into a Process and Exclusivity Deed with Kidman Resources in relation to its proposal to acquire 100 percent of the outstanding shares in Kidman for $1.90 cash/share by way of a scheme of arrangement.[the_ad id=”31605″]The price represents a premium of 47.3 percent to the last closing price on 1 May 2019 and 44.4 percent to the 60-day volume weighted average price and corresponds to a transaction value of approximately $776 million.
Kidman’s major asset is a 50 percent interest in the Mt Holland lithium project based in Western Australia, which it owns jointly with Sociedad Quimica y Minera de Chile S.A. (SQM), one of the world’s largest producers and marketers of lithium products.
The project includes the construction of a mine and co-located concentrator at Mt Holland, and a lithium hydroxide refinery in Kwinana. Lithium hydroxide is key to the electric vehicle value chain.
The Kidman Board has stated that it supports the Proposal. Upon executing transaction documentation on commercial terms consistent with the Proposal, the Kidman Board intends to recommend that shareholders vote in favour of the Proposed Scheme.
Under the Process and Exclusivity Deed, the Kidman Board has granted Wesfarmers up to four weeks to undertake exclusive confirmatory due diligence. During this period, the parties will negotiate a Scheme Implementation Agreement (SIA), reflecting the key commercial terms of the Proposal. A number of Kidman’s major shareholders, Board members and key management, which together own approximately 17 percent of Kidman’s outstanding shares, have indicated their support for the Proposal and have entered into voting agreements with Wesfarmers.
SQM has also indicated its support for the Proposal. The Proposal is conditional upon the satisfaction of customary conditions including the completion of confirmatory due diligence, entry into a SIA, final Board approvals and the approval of Kidman shareholders.
The Proposal is also conditional on Wesfarmers entering into an agreement with SQM to effect amendments to the Mt Holland lithium project Joint Venture Agreement.
Wesfarmers Managing Director Rob Scott said the acquisition of Kidman will provide an attractive investment in a project that will benefit from the global uptake of electric vehicles, while drawing upon the Wesfarmers Chemicals, Energy & Fertilisers (WesCEF) business’ ability to design, construct, commission and operate complex chemical plants.