Kidman Resources’ Share Price Rockets 44.34% on Takeover Bid

Today, Wesfarmers Ltd [ASX:WES] launched a $776 million takeover bid for lithium mining company Kidman Resources Ltd [ASX:KDR].

At the time of writing, Kidman Resources’ share price is trading 44.44% higher, at $1.86 apiece.

Naturally, Wesfarmers’ share price is a little flat after the bid, down slightly by .14%, to $35.65 apiece.

The offer was announced Thursday morning, upon winning the backing of Kidman’s board and joint venture partner. It follows Wesfarmers’ $1.5 billion bid for rare-earth miner Lynas Corporation Ltd [ASX:LYC].

Related: Don’t buy a single lithium stock until you’ve read this report. Read more about it here for free. 

Wesfarmers’ resource focus aids Kidman Resources’ share price

Now more than ever, people are looking for alternative ways to power our way of life. The emerging energy market we are seeing today has thrusted lithium miners in high demand.

Currently, Kidman has a 50% stake in a lithium project in Mount Holland, Western Australia.

The project includes an under-construction mine, as well as a lithium hydroxide refinery in Kwinana.

It seems Wesfarmers’ new resource focus is helping Kidman Resources’ rising share price, as the company is seeking to diversify itself and move out of supermarket chain Coles. Last year, Wesfarmers shed most of its stake in the grocery giant.

Wesfarmers currently owns retail chains Bunnings, Kmart, Target and Officeworks.

Wesfarmers boss, Rob Scott, commented on the takeover:

The acquisition of Kidman provides an opportunity to invest in and develop a large-scale, long-life and high-grade lithium hydroxide project.

It also creates a unique partnership with SQM, a global leader in the lithium industry with a long operating history and deep market knowledge.’

In support of the deal is the world’s largest lithium producer, and Kidman’s joint venture partner, the Chilean group Sociedad Química y Minera (SQM), as reported by The Sydney Morning Herald.

Kidman Resources waiting on shareholders 

Currently, Kidman’s board members and members of its key management already support the takeover — granted, there is no better offer put forward.

Together they make up about 17% ownership of Kidman shares.

But in order for the take-over to go ahead, the deal needs the support of the remaining Kidman Resources shareholders.

With the extra muscle coming from Wesfarmers, investors could see further shifts to Kidman Resources’ share price, as funding for further lithium mining begins to pick up.

But regardless, the growing demand for alternative energies — and especially the use of lithium — could, or at least should, breed more upside potential for investors.

Regards,

Ryan Clarkson-Ledward,
For Money Morning

PS: Are you interested in lithium stocks, but don’t know where to start? Our free investor’s report can help. Don’t buy a single lithium stock until you’ve read it. Download our free guide to learn more.

 


Ryan Clarkson-Ledward is one of Money Morning’s junior analysts. Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects. Ryan’s primary focus is assisting Sam Volkering with background research and insight for readers by dissecting the latest events affecting the world. Working closely with Sam, they explore the latest in small-cap and technology stocks as well as cryptocurrency opportunities. You can find Ryan’s contributing research, developments, and supporting information across several e-letters, including:


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