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Uranium One Surges After ARMZ Buyout Offer: Johannesburg Mover

Uranium One Inc. (UUU) rose to its highest level in 10 months in Johannesburg trading after JSC Atomredmetzoloto said it plans to buy the shares it doesn’t own in the Canadian company for C$1.3 billion ($1.32 billion).

The company gained 14 percent to 24.51 rand, the highest since March 15 as of 2:39 p.m. and the biggest intraday jump since Dec. 27. About 248,500 shares changed hands, more than nine times the daily average for the last 90 days.

Atomredmetzoloto, which together with units owns 51.4 percent of Uranium One, and its Effective Energy NV affiliate offered C$2.86 a share, the Vancouver-based target said in a statement today. The offer from the state-owned, Moscow-based company, known as ARMZ, is a 32 percent premium to Uranium One’s 20-day weighted average price in Toronto, it said.

“We are confident that the company will be able to deliver sound production growth and continue enjoying one of the lowest costs of uranium production in the world,” said Leila Kulbayeva, mining and industrials research director at Visor Capital in Almaty, Kazakhstan. “Our target price is C$5.03 per share and we do not recommend shareholders accept the offer.”

ARMZ aims to build a company covering the full nuclear cycle, from mining uranium to building reactors, said Kulbayeva in an e-mailed response to questions. ARMZ may be seeking to gain from reduced uranium prices following the Fukushima nuclear disaster, and its offer for Uranium One is low, she said.

Japan’s Earthquake

Japan’s strongest earthquake on record in March 2011 and a subsequent tsunami damaged reactors at the Fukushima Dai-Ichi nuclear power plant run by Tokyo Electric Power Co. (9501), releasing radiation and causing the evacuation of 160,000 people.

A Japanese general election held Dec. 16 brought to power the Liberal Democratic Party, which has vowed to decide within three years whether to return all the country’s nuclear power stations to production. Uranium for delivery in July was unchanged at $42.40 per 250 pounds on the New York Metals Exchange, down 22 percent from a year earlier.

“We recommend that shareholders vote in favor of the plan of arrangement,” Ken Williamson, chairman of an independent committee appointed to evaluate the bid, said in Uranium One’s statement. A shareholders’ meeting on the bid is planned for March.

To contact the reporter on this story: Jaco Visser in Johannesburg at avisser3@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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