Denison, UEC bidding war for UEX heats up

A last minute Denison bid caused a UEX shareholder vote to be suspended



It had looked like shareholders would vote through a UEC bid on 9 August, but the vote was postponed following a last-minute superior proposal from Denison.

The 9 August Denison move upped the ante by 7% over the price implied by the most recent arrangement agreed between UEX and UEC, dated 5 August.

This would see UEX shareholders receive 0.32 shares of Denison in exchange for each share of UEX held which, Denison says, implies a purchase price of C$0.41 (US$0.32) per UEX share, on a spot basis, as of market close on 8 August.

Both Denison and UEC have expressed displeasure at the way in which the UEX board has handled the bids.

"We note that on August 5th, UEC increased its offer in response to Denison's superior acquisition proposal of July 22nd, and that the UEX board of directors concluded that the amended terms offered by UEC constituted a matching offer - despite the fact that it implied a lower UEX price from the perspective of premiums over normalized trading periods," Denison's president and CEO David Cates said.

He said it was "puzzling" that the UEX board was not compelled by Denison's prior offer while adding he was happy to see Athabasca Basin assets "so coveted" by other industry participants.

Denison and UEX are both focused on the Canadian Athabasca Basin and already share many assets.

UEC has two "production ready" ISR hub and spoke platforms in South Texas and Wyoming, USA.

While UEX has pushed the vote on the UEC deal back to Monday, 15 August, it has not changed its recommendation of the arrangement.

UEX explained that UEC is under no obligation to match the terms of the deal, but if it does UEX will implement the amended agreement.

Alternatively, if Denison's deal remains the superior, UEX may accept it and pay UEC a termination fee of US$8.8 million.

Denison's Cates said he recognises that UEC remains in the "driver's seat" through its right to match and that his company's offer may fall through.

"That said, we believe that the UEX assets are so complementary to our own portfolio and Athabasca Basin specialisation that it would be short-sighted not to afford another opportunity for both Denison and UEX shareholders to prosper from this combination," he said.

Earlier in the week, Red Cloud Securities said it expected UEX shareholders to accept the UEC offer despite it being a "relatively cheap acquisition" and Denison offering more synergies.

"The current UEC bid now represents 82% of our UEX target price as opposed to its original offer at 72% of our target," Red Cloud said 8 August.

Red Cloud targets C$0.60 for UEX.

"While UEX remained mum in its PR, UEC notes that 38% of eligible UEX shareholders have tendered with 93.7% voting in favour of the UEC offer," it said at the time.

UEC's president and CEO Amir Adnani said the company is "extremely disappointed" in UEX for delaying the shareholder vote.

"The new non-binding Denison offer is 5% more dilutive to its shareholders compared to UEC's superior bid," he said 9 August.

"We look forward to a new shareholder meeting at or earlier than August 15," he said.

Russia, which supplies almost 15% of global uranium concentrates, has been subject to numerous sanctions in the wake of its large-scale invasion of Ukraine in February, which has made uranium supply in other jurisdictions more attractive.

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