Paladin Energy to Acquire Fission Uranium in a $1.14 Billion All-Share Deal

Paladin Energy Limited (ASX: PDN) has announced a definitive agreement to acquire Fission Uranium Corp. (TSX: FCU) in a transaction valued at $1.14 billion. The all-shares deal, which is expected to close in the third quarter of 2024, aims to create a major player in the uranium sector with a pro-forma market capitalization of approximately US$3.5 billion.

Under the terms of the agreement, each Fission shareholder will receive 0.1076 fully paid shares of Paladin for each Fission share held, translating to an implied value of $1.30 per share. This offer represents a 25.8% premium to Fission’s closing price on June 21, 2024, and a 30% premium to its 20-day volume-weighted average price (VWAP). Upon completion, Fission shareholders will own 24% of the combined entity.

The merger is set to enhance the development pipeline and diversify the presence of the new entity across key uranium mining jurisdictions, including Canada, Namibia, and Australia. Paladin’s CEO, Ian Purdy, emphasized the strategic fit, stating, “The acquisition of Fission, along with the successful restart of our Langer Heinrich Mine, is another step in our strategy to diversify and grow into a global uranium leader across top uranium mining jurisdictions.”

Fission’s President and CEO, Ross McElroy, echoed this sentiment, highlighting the complementary nature of the two companies. “The combination of Fission and Paladin will create a world-class diverse uranium producer, adding a class-leading development project in a Tier 1 jurisdiction,” McElroy said.

The board of directors of Fission, following a unanimous recommendation from its special committee of independent directors, has endorsed the transaction. Opinions from financial advisors Cantor Fitzgerald and SCP Resource Finance have affirmed the fairness of the offer from a financial standpoint. Key members of Fission’s senior management, holding 0.7% of the outstanding shares, have entered into voting support arrangements to back the deal.

The news has been met with mixed reactions in the market. While some shareholders appreciate the premium offered, others, like @SloCan68 on X, believe the offer undervalues Fission. “For years I watched $FCU ($FCUUF) stock price trade at a 10-20% discount to $DML ($DNN). If you ask me what is the fair value of @FissionUranium today, I would say C$2.30s. A buyout offer of less than C$4-$5 would be unacceptable to me,” he posted.

The transaction, which requires approval from Fission shareholders, will be put to a vote at a special meeting expected to be called around July 23, 2024. The deal also necessitates clearance under the Investment Canada Act and the Competition Act, as well as approvals from British Columbia courts and applicable stock exchanges.

Following completion, Fission shares will be delisted from the TSX, OTCQX, and Frankfurt Stock Exchange, while Paladin will apply for a listing on the TSX.

Information for this briefing was found via the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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