Wesfarmers announces completion of Kidman Resources acquisition

Wesfarmers Ltd (ASX: WES) has announced to the ASX its completed acquisition of Kidman Resources Ltd (ASX: KDR)

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Wesfarmers Ltd (ASX: WES) share price has risen marginally today, closing 0.6% higher at $39.91.

This comes as Wesfarmers announced this afternoon that it has 'implemented the scheme of arrangement' under which the company has acquired all issued ordinary shares of Kidman Resources Ltd (ASX: KDR). A cash payment of $1.90 per share will be paid to all existing Kidman shareholders today and it's expected that Kidman will be removed from ASX listing by end of trade tomorrow.

Wesfarmers' Managing Director Rob Scott said the company was pleased to welcome Kidman team members joining the Wesfarmers Group today, stating "this acquisition and our planned future investment is an attractive opportunity to participate in the development of a large-scale, long-life and high-grade lithium hydroxide project in Western Australia in partnership with a global leader in the lithium industry… it leverages and builds on the existing strengths and chemical processing capabilities within our Chemicals, Energy and Fertilisers business, while supporting Western Australia's ambition to become a global hub for downstream lithium processing".

It has been an eventful year of disruption at Wesfarmers. After offloading 85% of its Coles Group Ltd (ASX: COL) ownership in November, the company attempted a takeover bid for rare-earth miner Lynas Corporation Ltd (ASX: LYC), which was ultimately unsuccessful.

Who is Kidman Resources?

Kidman Resources is a Melbourne-based lithium developer, who in conjunction with Chile's SQM Group, owns a 50% interest in the Mt Holland lithium project based in Western Australia. This project is estimated to house "one of the world's most significant lithium deposits". At the stock's height in May 2018, KDR shares were commanding a price north of $2.30, but before Wesfarmers announced its $1.90 per share acquisition, Kidman was trending around the $1.30 mark.

Lithium is a metal mostly used in the manufacturing of lithium-ion batteries – the most common form of rechargeable battery that is found in smartphones, laptops and other portable devices. Perhaps the most exciting application that investors see for lithium is the rise of electric vehicles made by Tesla Inc. and others. However, lithium stocks have seen a sump in recent years as an oversupply of the metal has led to depressed commodity prices – perhaps motivation for Wesfarmers' acquisition.

Sebastian Bowen owns shares of Tesla. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Tesla. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Top ten gold trophy.
Share Gainers

Here are the top 10 ASX 200 shares today

ASX investors endured a sour end to the trading week today.

Read more »

Lion holding and screaming into a yellow loudspeaker on a blue background, symbolising an announcement from Liontown.
Opinions

3 ASX shares that could walk away winners from the 'Future Made in Australia Act'

Life is a whole lot easier when money is being thrown your way.

Read more »

Two excited woman pointing out a bargain opportunity on a laptop.
Dividend Investing

With 8%+ dividends, how long can these ASX 200 passive income shares stay cheap?

I think ASX 200 investors looking for ‘cheap’ passive income shares will want to check these out.

Read more »

Broker looking at the share price on her laptop with green and red points in the background.
Broker Notes

Brokers name 3 ASX shares to buy now

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why Avita Medical, Cettire, Domino's Pizza, and Star shares are falling today

These ASX shares are having a tough end to the week. But why?

Read more »

A young woman holding her phone smiles broadly and looks excited, after receiving good news.
Share Gainers

Why Boral, FBR, Origin, and Regis Resources shares are pushing higher today

These ASX shares are ending the week positively. But why?

Read more »

a man in a hard hat and high visibility vest smiles as he stands in the foreground of heavy mining equipment on a mine site.
Broker Notes

Up 15% in 13 days, is it too late to buy South32 shares?

South32 shares have risen 1%-plus per day for the past 13 trading days. Have investors missed the boat?

Read more »

Animation of man and woman shaking hands on a deal on top of gold coins.
Mergers & Acquisitions

Which ASX companies are deploying dividends to secure a $1.9 billion deal?

Dividends appear to have sealed the deal for an ASX mega-merger.

Read more »