A rare-earth steal at a 45% markup – the washington post electricity hero names


On the face of it, Wesfarmers Ltd.’s A$1.5 billion ($1.1 billion) offer for rare-earths producer Lynas Corp. looks outrageously generous. The bid comes at a 45 percent premium to the target’s last close. For most of the past electricity problem in up five years, a slump in the rare-earths market and a regulatory tangle in Malaysia, where Lynas processes its Australian-mined ore, has seen it worth less than a third as much.

That’s where you have to check tropico 5 power plant the footnotes, though. Any takeover deal comes with conditions, but one Wesfarmers bullet point is particularly significant. A transaction will be subject to “ensuring electricity voltage used in usa that relevant operating licences in Malaysia are in force and will remain in force for a satisfactory period following completion of the transaction electricity sound effect”, the company said Tuesday. Fair enough, you might say – but if those licenses were in place, Wesfarmers’ offer would look a good deal less generous.

The longstanding problem for Lynas has been electricity experiments for 4th graders that the waste products from rare-earths production are pretty unpleasant stuff – a plaster-like substance known as phosphogypsum that’s hard to recycle because it contains traces of radioactive thorium and n gas price uranium. That fact has contributed to almost a decade of uncertainty around its Malaysian processing plant as local politicians have objected to the tailings dumps associated with the facility.

It’s hard to argue that it is. Lynas was worth as much as A$1.8 billion last May, before the election of a new Malaysian government threw the permitting issues into jeopardy. If the m gasol company was valued at the 19.5 times blended forward 12-month price-earnings ratio it attracted back then, rather than the 10.5 times multiple it’s on at present, it would be worth gas x while pregnant substantially more – and that’s not even counting the fact that analysts have already cut their earnings estimates for the stock in half to account for the regulatory uncertainty.

Despite its disastrous takeover of the Homebase gas 1981 home improvement chain in the U.K., Wesfarmers, a conglomerate that has its roots in a Western Australian fertilizer business, has a reputation as a canny buyer and seller of assets. It took over the Coles supermarkets business gas 10 ethanol and performed a textbook turnaround in 2007, and sold out of its coal mines at decent prices.

That means that other players may gas pain in chest take an interest. Rare earths are crucial for producing high-tech components such as LEDs and efficient motors, and the market is overwhelmingly dominated by Chinese producers – a worry for manufacturers in Japan, Europe and the U.S., who fear Beijing’s control of their supply chain. As the only wholly non-Chinese rare earths producer at present, Lynas gas bloating after eating is in a unique position.

Lynas’s senior lenders are a joint venture of Japanese trading house Sojitz Corp. and the state-owned Japan Oil, Gas and Metals National gas 87 89 91 Corp., and Sojitz has a long-standing offtake agreement. They’ve had plenty of opportunities to take over Lynas over the past decade and would probably be quite happy to see the company hp gas online payment pass into the control of a stable group like Wesfarmers, but it’s not impossible they will launch a rival bid. Glencore Plc, which likes to get crucial positions in lower-volume key commodities such as zinc and cobalt, is another possible suitor.