Lynas has rejected a $1.1 billion takeover bid from Wesfarmers. The rare earths mining company said it had evaluated the bid and “concluded that it will not engage with Wesfarmers on the terms outlined in the indicative and highly conditional proposal.”

The rejection, issued just a day after the unsolicited bid, came as no surprise to analysts. Dylan Kelly, a mining analyst with CLSA, told the Sydney Morning Herald newspaper that the Wesfarmers’ bid was “materially undervaluing” Lynas. “We think Lynas is worth at least $2.5 billion,” he said.

In a note to clients, Bank of America Merrill Lynch analyst, David Errington, said he was “ambivalent (at best)” about the takeover bid, and on current financials, the acquisition looked “underwhelming.”

“We think that any acquisition should either stand out in terms of the underlying fundamental driver to do the acquisition or it is financially compelling,” he added. “Our concern with this acquisition is that it looks to us (at this point in time) to be neither.”

In a statement, Lynas described itself as a “unique” company, being the only significant rare earths miner and processor outside China. In addition, the company pointed to its “strong, irreplaceable” assets that include the Tier 1, long-life high-grade Mount Weld ore body in Western Australia.

Deposits from Mount Weld are shipped for further processing to the Lynas plant in Kuantan, Malaysia, where it is currently in dispute with authorities on the removal of toxic waste from the site. The plant could be closed by September if Lynas does not reach agreement with the Malaysian government.