- Paladin Energy (ASX:PDN; OTCQX:PALAF) has confirmed to the market its attempted takeover of Canada-based resource company Fission Uranium Corp. (TSX:FCU) was blocked by a Chinese shareholder late last month.
- Under Canadian law, Australia-based Paladin has to enter into a legal process to acquire Fission Uranium; all in all, a court must approve a takeover plan.
- A subsidiary of China General Nuclear Power has used its 11.26 per cent shareholding in Fission to block the deal.
- Shares of Fission Uranium Corp. were down 2.97 per cent, trading at C$0.98 at 10:48 am.
Editor’s note: The following story is used with permission from Hot Copper, which – like Stockhouse – is a corporate brand from The Market Limited.
Australia-based uranium producer Paladin Energy (ASX:PDN; OTCQX:PALAF) has confirmed to the market its attempted takeover of Canada-based resource company Fission Uranium Corp. (TSX:FCU) was blocked by a Chinese shareholder late last month.
Under Canadian law, Paladin has to enter into a legal process to acquire Fission Uranium; all in all, a court must approve a takeover plan. Paladin – Western Australia-based and with a market cap of more than AU$3 billion – moved to snatch Fission back in June.
The only problem is, last month, a subsidiary of China General Nuclear Power (CGN) indicated it would use its 11.26 per cent shareholding in Fission to block the deal. And on Sept. 26, Paladin reported on Wednesday that’s exactly what happened.
The hearing wherein CGN opposed the takeover was the final hearing of the process required under relevant Canadian laws, so in that light, Paladin is now waiting for a final decision from the same court “in the coming weeks.”
But here’s where it gets interesting: Paladin confirmed on Wednesday it had received a notice from François-Philippe Champagne, Canada’s minister of innovation, science and industry, ordering a national security review of the court’s plan of arrangement, under a further series of Canadian investment laws.
On its website, the relevant agency describes national security reviews as tools allowing the federal government to review any foreign investments to ensure “overall economic benefit to Canada” – including risks of “national security harm.”
That’s about all we know for sure. Paladin, for its part, was keen to remind on Wednesday nothing is yet set in stone.
“There can be no certainty … that the arrangement will be successfully completed,” Paladin wrote on Wednesday.
What exactly CGN gets out of its opposition to the takeover is unclear, though, it perhaps makes a kind of sense: if 100 per cent of Fission is gobbled up by an Australian company, then CGN loses its exposure to a nuclear energy project in Canada.
And with the current geopolitical landscape being what it is, it’s unlikely CGN would be able to keep any ties to that project.
That appears to be the motivation over financial concerns. Paladin’s ultimate deal for Fission offers it a premium around +26 per cent to what it traded around the time the offer was made.
Canadian competition regulators have already approved the deal, and, nearly 70 per cent of Fission shareholders have already indicated approval. The deal is perceived by the company to be on the cusp of approval, but clearly, CGN doesn’t feel that way.
Fission Uranium Corp. is a Canada-based resource company. The Company’s principal business activity is the acquisition and development of exploration and evaluation assets. The Company is a resource issuer specializing in uranium exploration and development in Saskatchewan’s Athabasca Basin in Western Canada.
Paladin Energy Ltd. is an Australia-based independent uranium producer with a 75% ownership of the world-class long life Langer Heinrich Mine (LHM) located in Namibia. The Company also owns a portfolio of uranium exploration and development assets in Canada and Australia.
Shares of Fission Uranium Corp. (TSX:FCU) were down 2.97 per cent, trading at C$0.98 at 12:34 pm.
Shares of Paladin Energy Ltd. (OTCQX:PALAF) were up 1.08 per cent, trading at C$8.44 at 11:49 am.
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(Top photo of Patterson Lake South uranium property: Fission Uranium Corp.)
