The Lynas Corporation Ltd (ASX: LYC) share price could come under pressure today after Wesfarmers Ltd (ASX: WES) provided an update on its takeover of the rare earths producer.
What was announced?
In March Wesfarmers made a conditional, non-binding indicative proposal to the board of Lynas Corporation to acquire Lynas for $2.25 cash per share, pursuant to a scheme of arrangement.
At the time the conglomerate advised that its proposal was subject to a number of matters.
These included the completion of due diligence, the negotiation and execution of an implementation agreement for approval by both boards, Lynas' relevant operating licences in Malaysia being in force and to remain in force for a satisfactory period following completion of the transaction, and regulatory and shareholder approvals.
Last week Lynas revealed that the Malaysian government had announced that the Lynas Malaysia operating licence will be renewed by the due date of September 3 for an initial period of six months.
Conditions of the approval included its Cracking & Leaching operations being relocated to Western Australia and Lynas Malaysia being required to obtain consent for the location of a Permanent Deposit Facility (PDF) for WLP residue within six months.
Whilst this was a positive for the company, it hasn't been enough for Wesfarmers.
According to a late announcement on Thursday, Wesfarmers has been unable to progress its proposal and does not intend to pursue it further.
Wesfarmers' managing director, Rob Scott, appeared to believe that the deal wouldn't add value to shareholders as it stood.
He said: "Wesfarmers remains focused on delivering value to its shareholders through disciplined capital allocation within our divisions and when considering new investments."
Overall, I suspect that this could put a bit of pressure on the Lynas share price today. But the Wesfarmers share price could potentially rise given how some in the market weren't keen on the deal.
