Wesfarmers is looking to splash some of its Coles cash after making a $1.5 billion offer for rare earths miner Lynas Corp.
The $2.25-per-share all-cash offer represents a 44.7 per cent premium to Lynas' share price before the start of trade on Tuesday.
Wesfarmers had been looking for acquisitions after the demerger and IPO of supermarket Coles in November, as well as the the sale of the Bengalla coal mine, Kmart Tyre and Auto Service, and Quadrant Energy.
Managing director Rob Scott said an investment in Lynas would leverage Wesfarmers' assets and capabilities, including in chemical processing.
"We also acknowledge the importance of the Lynas Advanced Materials Plant in Malaysia and the strong contribution made by Lynas' management team and its employees across all operations," he said.
Wesfarmers said the deal would be contingent on a number of factors, including whether Lynas licences in Malaysia will remain in force for long enough after the acquisition.
In December, Lynas' chief executive Amanda Lacaze said uncertainties surrounding its $800 million plant in Malaysia had hampered efforts to plan expansion.
Lynas shares were last trading at $1.555, down from a five-year high of $2.76 in May 2018.
The company has requested a trading halt pending an announcement on the $1.5 billion offer, which is expected before trade on Thursday.
Wesfarmers shares were worth $35.03 before trade on Tuesday, up from $34.01 shortly before the Coles demerger in November.