Paladin Energy shares tumble on Fission Uranium takeover
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The news: Paladin Energy shares fell in morning trade on the ASX after the uranium explorer announced it had agreed to acquire Canada’s Fission Uranium after market close on Monday.
The numbers: Paladin shares were down 7% to $12.31 by midday AEST.
On Monday, Paladin announced that it will purchase 100% of Fission shares at C$1.30 ($1.43) at an implied equity value of $1.25 billion.
On completion of the deal, Fission shareholders will own 24% of Paladin which will have a pro-forma market capitalisation of approximately USD3.5 billion ($5.27 billion). Paladin shareholders will own about 76% of the combined company.
The context: Morgan Stanley analysts noted that Fission's flagship project Patterson Lake South is more progressed, has a bigger expected annual production, is higher grade, and has lower costs than Paladin's existing Canadian growth option Michelin.
They estimated that with Patterson Lake South, Paladin could grow into a "meaningful global uranium play" by FY29.
Citi analysts said that for the long-term "uranium bulls" the transaction looks advantageous and creates an "impressive mergeco production pipeline".
The sources: ASX announcement, Morgan Stanley research, Citi research
