Rio looking into RE, page-2

Rio going into REE market will be great for the entire REE market. How does a very strong competitor entering market help Lynas? IF they do this seriously that will increase demand short term. Long term it will dramatically increase supply. RIO will not enter this business to make 5 or 10 K ton a year,
RIO had 54B in revenue last years. There Revenues have been flat to slightly declining for several years. They are not going to invest lots of money unless the investment is going to improve revenue by at least 5% hopefully 10% over time. What does this do to Lynas's competitive position.

It would make sense for RIO to by Lynas to jump start Rio. At what price. My guess is less than half of what the SP is today. Look up some typical buy out ratios for past M&A activity. here are Lynas's key statistics


Earning growth YOY is -85%, This is a key in setting multiples in M&A situations.
Book value/ share AUD 2.50. For companies with 30 + months of declining revenue this is usually less than one. Anything over book is Good Will which never looks good on balance sheet.
Revenue is AUD 0.52 usually this is close to 1 on 1.
EPS $0.05 this averages to about 10 Growing profits maybe 20 or more Declining profits less than 10.

I know the board and SH probably would never accept an offer of USD 3 or lees unless they see the situation as hopeless.

DYOR
Then be very careful about what you wish for, You may be upset and angry when you get it.

Remember to receive what Rio would like for Revenue and Profits on their P&L would take $ Billions if they were to buy Lynas. This would be a major consideration VS starting fresh.