(Reuters) - Russian state-controlled miner JSC Atomredmetzoloto has agreed to raise its stake in Uranium One Inc UUU.TO to 100 percent in a deal that values the Canadian miner at C$2.74 billion ($2.8 billion).
Atomredmetzoloto, or ARMZ, already owns 51.4 percent of Uranium One. It will pay C$1.3 billion, or C$2.86 per share, for the rest of the company before delisting it from the Toronto Stock Exchange, both companies said on Monday.
ARMZ’s offer is at a 19 percent premium to the stock’s Friday close. Uranium One’s shares have fallen to C$2.41 from a peak of C$18.65 in March 2007, when spot uranium was trading at more than triple current prices.
The acquisition will give ARMZ full control of Uranium One’s assets in Kazakhstan, the United States and Australia. The Toronto-based company has almost tripled production since 2009.
Demand for uranium, used mainly as fuel for nuclear power plants, has come under pressure in the two years since the March 2011 earthquake and tsunami in Japan triggered a meltdown at the country’s Fukushima nuclear energy plant.
Spot uranium prices are around $42 per pound compared with a peak of more than $135 per pound in June 2007.
Announcing plans to delist Uranium One, ARMZ Chairman Vadim Zhivov said the stock market had offered “considerably broader opportunities for development” when the Russian company acquired its controlling stake in 2009.
“Now, the situation has changed and the private format is more effective for meeting the challenges in front of us,” Zhivov said in a Russian-language statement on ARMZ’s website, www.armz.ru.
Uranium One said in August it was betting on growing demand for uranium in the emerging markets of China, India, South Korea, Russia and the Middle East.
More than 56 percent of the 559 nuclear reactors earmarked for construction worldwide are in China, India or Russia, data from the World Nuclear Association show.
Under the deal with ARMZ, the company must pay a termination fee of C$45 million if the transaction - which has been approved by Uranium One’s board - does not go through. The deal is expected to be completed in the second quarter.
Canaccord Genuity Corp was the financial adviser to the independent committee that was set up by the Uranium One board for the deal, while ARMZ was advised by BMO Capital Markets.
Goodmans LLP and Cassels Brock & Blackwell LLP are acting as legal counsel to Uranium One and the independent committee respectively. Stikeman Elliott LLP is legal counsel to ARMZ.
Uranium One shares closed at C$2.41 on Friday at the Toronto Stock Exchange.
($1 = 0.9837 Canadian dollars)
Reporting by Avik Das in Bangalore; Writing by Krishna Das; Editing by Robin Paxton