JSC Atomredmetzoloto, a Russian state-owned uranium miner, said it plans to buy the shares it doesn’t own in Uranium One Inc. for C$1.3 billion ($1.32 billion) and take the company private.
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 Moscow-based company, known as ARMZ, is a 32 percent premium to Uranium One’s 20-day weighted average price in Toronto, it said. It won’t be increased, ARMZ Chairman Vadim Zhivov said.
ARMZ aims to build a company covering the full nuclear cycle, from mining uranium to building reactors, said Leila Kulbayeva, mining and industrials research director at Visor Capital in Almaty, Kazakhstan. ARMZ may be seeking to gain from reduced uranium prices following the Fukushima nuclear disaster in Japan, and its offer for Uranium One is low, she 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,” Kulbayeva said in an e-mailed response to questions. “Our target price is C$5.03 per share and we do not recommend shareholders accept the offer.”
ARMZ will arrange funding from state-owned shareholder Rosatom Corp. to fund the transaction, Zhivov said today. The buyout offer is “friendly” and “optimal,” and won’t be increased should minority shareholders vote it down, he said.
The Russian company is seeking to consolidate its ownership of Uranium One so that it can remain among the world’s largest, low-cost producers, Zhivov told reporters in Moscow in a video linkup from Toronto. A closely held ownership will allow ARMZ to better pursue its strategy for developing assets.
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., 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.
Uranium One gained as much as 18 percent to C$2.85, its highest level in eight months on an intraday basis, in Toronto. The stock jumped 15 percent in Johannesburg. The company owns uranium mines in Kazakhstan and explores for the metal in the U.S.