Australia-listed Paladin Energy [ASX:PDN] and Canada’s Fission Uranium Corp TSX:FCU have entered into a definitive arrangement agreement where Paladin will acquire 100% of the issued and outstanding shares of Fission in a court approved plan of arrangement under the Canada Business Corporation Act.
Fission shareholders will receive 0.1076 fully paid shares in Paladin for each Fission share held at the closing of the transaction. The offer consideration represents an implied value of C$1.30 per Fission share, and an implied equity value of C$1,140 million for Fission.
It is a 25.8% premium to the closing price of the Fission Uranium on the TSX on 21 June 2024 and a 30 premium to the 20-day Volume Weighted Average Price of Fission shares at that time.
Paladin Energy to list on TSX
Upon completion of the transaction, Fission shareholders will own 24.0% of Paladin with a market cap of approx US$3.5 billion. Paladin has applied to list their shares on the Toronto Stock Exchange concurrent with completion of the transaction, so Fission shareholders will receive TSX-listed Paladin shares.
Fission’s board, following the unanimous recommendation by its Special Committee of Independent Directors and in consultation with Fission’s financial and legal advisors, is recommending that Fission shareholders vote in favour of the transaction.
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Cantor Fitzgerald has provided an opinion to the Special Committee that the transaction is fair, from a financial point of view to the Fission shareholders. SCP Resource Finance has also provided an opinion to the board of Fission that the transaction is fair, from a financial point of view to Fission shareholders.
Directors and members of senior management of Fission holding 0.7% of the outstanding Fission stock said they have entered into voting support arrangements with Paladin where they have agreed to vote their Fission shares in favour of the transaction at the special meeting of shareholders to be called by Fission to approve the deal.
The transaction is targeted to close in the September 2024 quarter.
Global uranium inventories are at decade lows
Uranium demand is at 197m lbs and growing at +5%-6% CAGR. Supply is only at 155m lbs and it is taking greenfield mines over 15 years to come on stream. This explains Paladin’s move this week with a whopping annual uranium supply deficit of 42m lbs. The accumulated supply deficit will be 1.15bn lbs by 2040.
The world has committed to tripling nuclear power capacity by 2050. Small modular reactor development is happening fast, placing yet more pressure on uranium supplies.
The uranium industry has seen decades of under investment and made very little money, until now. Global electricity production from nuclear is going to rise from 10% to 30% over time. It’s difficult to find another commodity where the underlying prices have risen over 4x and the supply side response is so muted.
