Far East Capital Newsletter
Westfarmer's bid for Lynas points to a future in neodymium (Nd) and praseodymium (Pr)
30 Mar 2019

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Westfarmer's bid for Lynas points to a future in neodymium (Nd) and praseodymium (Pr)

The testing of the uptrend in the All Ords we noted at the end of the previous week turned into the beginning of a correcting pattern last Monday, in a predictable response to the slump in the Dow on the previous Friday. This shouldn’t have been surprising as it has been an extraordinarily good run upwards, given what is happening in the world. The Energy index likewise is turning down but the Mining Index seems wants to go higher.

In a move that surprised most analysts and shareholders, Wesfarmers (ASX:WES) has made a conditional, non-binding indicative proposal to acquire Lynas for $2.25 a share, payable in cash, pursuant to a scheme of arrangement. The proposal is a premium of 44.7% to the last closing price and a premium of 36.4% to the 60-day weighted average price of Lynas to 25 March 2019. There are many bridges to cross before a deal like this is finalised so there is no certainty of closure, but let’s look at the strategic significance and its implications for other stocks. 

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