French nuclear giant covets UraMin

Laura Bobak
Canadian Press

French nuclear giant Areva has presented a takeover bid for UraMin Inc. that puts a value of $2.5 billion (U.S.) on the South Africa-headquartered company.

The French-state-controlled company is offering $7.75 per share for UraMin, or about $8.27 (Canadian) at current exchange rates.

The shares were halted for the news yesterday morning on the Toronto Stock Exchange, but rose on the re-opening and closed at $8.85, up almost 11.5 per cent on the day.

The shares were trading at $6.95 Monday, before UraMin said it was in negotiations on a potential sale. A year ago, the price was $2.55.

UraMin's main asset is the Trekkopje uranium project in Namibia, which could be operational as early as this year.

The company also has exploration sites in the Central African Republic and South Africa, providing a good fit for "Areva's strategy to significantly increase its uranium production in the medium term," according to a joint statement.

Yesterday's deal continues a wave of consolidation in the global uranium industry as companies bulk up to cash in on record prices for the nuclear fuel as supply dwindles and demand soars.

Uranium companies are also trying to get bigger to take advantage of new exploration projects and find the financing to develop additional uranium sources in North America, Africa, Asia and Australia.

Recently, Uranium One Inc. announced a takeover of Energy Metals Corp. of Vancouver in a deal the two companies say will create a new entity with uranium production forecast to rival industry leader Cameco Corp. by 2013.

In yesterday's deal, the UraMin board supports the proposal, and Areva, which already owns 5.5 per cent of UraMin, has lock-up agreements with officers and directors holding 25 per cent of the company's shares.

Areva has the right to match any competing offers. The agreement includes a break fee if another bid prevails.

The deal is subject to regulatory approval.

Areva executives said during a conference call with analysts that the takeover will help the company with its goal of becoming the world's leading uranium producer.

The company is planning to double its production from 15 million pounds to about 31 million pounds by about 2011 or 2012, not including the UraMin acquisition. [via]