Under the terms of the acquisition proposal UEX shareholders would receive 0.32 shares of Denison in exchange for each share of each UEX share held. The proposal represents an implied purchase price of 51 cents per UEX share, on a spot basis as of the market close on August 8, 2022.
It also represents a 7% premium to the price implied by the amended arrangement agreement between UEX and rival bidder Uranium Energy Corp. [UEC-NYSE American] dated August 5, 2022.
The success of this offer is subject to the board of UEX determining that it is superior to the amended UEC agreement. It is also subject to UEC’s right to match.
“In making this offer, we recognize that UEC remains in the ‘driver’s seat’ through its right to match and that our offer may not ultimately prevail,’’ Denison President and CEO David Cates said in a press release.
“That said, we believe the UEX assets are so complementary to our own portfolio and Athabasca Basin specialization that it would be short-sighted not to afford another opportunity for both Denison and UEX shareholders to prosper from this combination,’’ he said.
UEX shares were unchanged at 48 cents and currently trade in a 52-week range of 60 cents and 23.5 cents.
UEX is a Canadian uranium and cobalt exploration and development company involved in a portfolio of uranium projects located in the eastern, western, and northern perimeters of Saskatchewan’s Athabasca Basin, the world’s richest uranium region, an area that in 2020 accounted for approximately 8.1% of the global primary uranium production.
Denison has said the acquisition of UEX would bolster Denison’s position as a leading uranium and development exploration company with an unwavering focus on the advancement of high-grade uranium deposits in the Athabasca Basin region.
Denison’s portfolio includes an effective 95% interest in its flagship Wheeler River uranium project, which currently ranks as the largest undeveloped uranium project in the Athabasca Basin.
In order for the UEX board of directors to consider if the acquisition proposal constitutes a “superior proposal” under the amended UEC agreement, UEX announced that it has postponed the special meeting of UEX securityholders, originally scheduled for August 9 to August 15, 2022.
Denison’s acquisition proposal is conditional on UEX terminating the amended UEC agreement, which will require the UEX board to assess the acquisition proposal to be a “superior proposal” and that UEC has failed to match in accordance with the terms of the amended UEC agreement.
If UEX shareholders opt to accept the latest Denison proposal, then UEX is required to pay to UEC a termination fee of US$8.8 million.