PERTH (miningweekly.com) – Takeover target Kidman Resources has entered into a scheme implementation deed with ASX-listed Wesfarmers, following a due diligence period.

Wesfarmers earlier this month launched a non-binding and conditional A$776-million cash offer for Kidman, marking a foray into lithium. Wesfarmers is offering shareholders A$1.90 a share in cash for their interests in Kidman.

Kidman said on Thursday that the board had concluded that the cash offer was in the best interest of shareholders, with the board recommending that shareholders accept the offer in the absence of a superior bid and subject to an independent expert valuation.

“We are pleased to recommend this attractive all-cash transaction with Wesfarmers to our shareholders,” said chairperson John Pizzey.

“Kidman’s focus has been to create value for shareholders through the development of a leading Australian integrated lithium project and we have made significant progress towards achieving this goal.

“However, the overarching objective of the Kidman board has always been to act in the best interest of shareholders and maximise shareholder value. After careful consideration of the future development pathway for the Mt Holland lithium project, the Kidman board has concluded unanimously that realisation of a significant premium to the undisturbed market value, at a certain cash price, is in the best interest of all our shareholders.”

Wesfarmers MD Rob Scott said that the execution of a scheme implementation deed agreement demonstrated significant progress towards the proposed acquisition of Kidman.

“This is an important milestone in advancing a transaction that provides Wesfarmers with an attractive investment and delivers Kidman shareholders with a compelling premium and certain cash return.”

Scott noted that as part of the due diligence, Wesfarmers had developed its own plan in relation to the development of the Mt Holland project, and intended to propose this plan, including some scope adjustments, to the joint venture (JV).

Subject to the final project design, movements in exchange rates, and JV approvals, Wesfarmers estimated that its share of capital expenditure for the project would be about A$700-million.

Wesfarmers on Thursday announced that it had struck a commitment deed with Mt Holland JV partner Sociedad Quimica y Minera de Chile (SQM) over the JV agreement between SQM and Kidman.

The commitment deed set out agreed amendments to the JV that would become binding if Wesfarmers completes the acquisition of Kidman, and related to a number of commercial and technical matters, which Wesfarmers said would support the successful development of the Mt Holland project.