Australian lithium miner Kidman Resources Ltd said on Thursday it received a takeover offer from conglomerate Wesfarmers Ltd in a deal valued at about A$776 million ($544 million).
The offer of A$1.90 per share represents a premium of 47.3 percent to Kidman's last closing price.
Kidman said its board decided that the proposal was in the best interests of shareholders and would engage further with Wesfarmers on an exclusive basis.
Shares under the control of the directors and management of Kidman, which constitutes shareholders holding about 17 percent of the shares, intend to vote in favour of the proposal, Kidman said in a statement.
"The acquisition of Kidman provides an opportunity to invest in and develop a large-scale, long-life and high-grade lithium hydroxide project in Western Australia," Wesfarmers Managing Director Rob Scott said in a separate statement.
Wesfarmers cited Kidman's major asset, a 50 percent interest in the Mt Holland lithium project based in Western Australia, as a major attraction for the bid.
Wesfarmers also said Sociedad Quimica y Minera de Chile S.A.(SQM), which jointly owns Mt Holland project with Kidman, is in support of its proposal.
In March, Wesfarmers launched a bid to acquire the only proven rare earths miner outside China, Lynas Corporation Ltd , for about $1.1 billion, after an exit from the last of its coal business last year.
However, Lynas has rejected the offer which in its view undervalued the company's "unique" position and its intellectual property.
($1 = 1.4251 Australian dollars)
(Reporting by Rashmi Ashok in Bengaluru; Editing by Sriraj Kalluvila, Bernard Orr)