US-based Uranium Energy Corporation (UEC) has agreed to acquire Canada-based uranium and cobalt exploration and development firm UEX in a transaction valued at C$234m ($181m).
Under the terms of the deal, UEC will acquire all the common shares of UEX by way of a statutory plan of arrangement under the Canada Business Corporations Act.
UEX’s shareholders will receive 0.0831 of a UEC common share, in exchange for each share of UEX common stock held.
The share exchange ratio indicates consideration of around C$0.43 ($0.33) per UEX Share, which is nearly 50% premium to the closing price of UEX shares on 10 June 2022.
Upon closing of the transaction, UEC shareholders are expected to own around 86.3% and UEX shareholders a 13.7% stake in the combined company.
UEC president and CEO Amir Adnani said: “UEC’s acquisition of Uranium One Americas in December 2021 marked the largest M&A transaction in the uranium sector in about a decade.
“The transaction was highly accretive for the company, and we have seen a very positive response from our shareholders and the marketplace. It also marks the largest North American M&A transaction in the uranium sector following the U1A acquisition.
“This transaction underscores UEC’s sector-leading strategy as the fastest-growing, pure-play, 100% un-hedged uranium company with assets only in the Western hemisphere.”
UEX owns a portfolio comprising 29 uranium projects that cover important areas of the producing eastern side and developing western side of the prolific Athabasca basin.
Five projects are advanced resource stage and already in strong joint-venture partnerships with uranium miners which enable UEC to remain operationally focused in the US, while benefiting from a new development pipeline with exploration potential in Canada.
The company’s portfolio is said to complement UEC’s near-term production-ready and brownfield assets in the US, and those in Canada, with medium and long-term potential.
UEC has a balance sheet with more than $180m of cash and liquid assets, zero debt, supporting production readiness and the ability to advance a strengthened project portfolio.
Its strong balance sheet is expected to provide UEX with additional capital to fund the continued exploration of its projects in the Athabasca basin and Nunavut.
UEX president and CEO Roger Lemaitre said: “This transaction with UEC reflects the efforts of the UEX team to create value through building an attractive strategic portfolio of assets and ultimately delivers a great outcome for UEX shareholders and complements our recent acquisition of JCU (Canada) Exploration Company Limited (“JCU”).
“The combination of UEC and UEX brings together two very strong and complementary portfolios and, in addition to a significant premium, provides our shareholders with the opportunity to participate in the continued growth of UEC.
“UEX shareholders will gain substantial exposure to production-ready low-cost U.S. ISR (in situ recovery) mining assets, a substantial physical uranium portfolio, a strong balance sheet and access to capital.”
The deal is anticipated to complete in the third quarter of 2022.
BMO Capital Markets and Rothschild & Co are serving as financial advisors and McMillan is acting as legal advisor to UEC on the transaction, while TD Securities and Sprott Capital Partners are serving as financial advisors, and Koffman Kalef is acting as legal advisor to UEX.
