Uranium M&A Activity – UEC buys UEX

Uranium Energy corp. has announced today that it wants to acquire all of the issued and outstanding common shares of UEX Corporation.

UEC is paying 0.0831 UEC shares per share of UEX.

The abbreviations are confusing, I know.

It means that UEC (Adnani’s company) is paying C$0.43 per share for UEX (Roger’s company), but instead of cash – it’s using its own shares.

UEX closed at C$0.28 yesterday. C$0.43 per share represents a 53.6% premium.

The deal means 13.7% dilution for UEC shareholder, even though the company has $180M in cash.

Given that UEX is one of the worst performing uranium stocks, and given that uranium stocks in general haven’t been great performers in recent past, I have two question for Amir Adnani;
1. Why are you buying this now when the market doesn’t want it?
2. Why are you using your shares (which are 40% off the recent highs) instead of your $180M cash reserve?

Given my conversation with Roger Lemaitre from earlier this year, I also have a question for him; Why are you selling this at a premium of only 50% into a very weak uranium market, if you felt like the market wasn’t treating you right 5 months ago?

Shareholders, of course, need to sign off on the deal but given that – I assume – many are down on their position this might come as a breath of fresh air. They deed 2/3rds of the votes (66%). They’ll be raising the vote in August this year.

They’ve added a part in the agreement where UEX is allowed to accept higher bids (than C$0.43), but not before allowing UEC to try and outbid the outbidder.

UEC is also giving UEX C$5M in the form of private placement – to bridge the gap between now and the finalisation of the transactio – at the same C$0.43/share price.

I am a shareholder of UEX and even the C$0.43 doesn’t bring my position in the green. So, I should be considered biased. I also don’t have any obligation to present facts in this writing so for all you know I might be lying. Although I don’t intend to lie, the fact that I can barely tie my own shoes should tell you that I’m not smart enough to read, understand and properly summarise news releases. Therefore, you shouldn’t rely on anything in this blog post and you should read the full news release over here: https://www.uraniumenergy.com/news/releases/index.php?content_id=902

Important warning

Antonio Atanasov is not an investment advisor. Antonio Atanasov owns shares of companies mentioned in this publication. The information provided in this publication – and all other publications by Resource Talks – is impersonal in nature and meant for general information purposes only. Before taking any action on any investment, it is imperative that you consult with multiple licensed, experienced, and qualified investment advisors. Get numerous opinions before taking your own decision in the end. The minimum risk on any investment mentioned in this publication is 100% loss of capital.

Shortly: you will lose all of your money and possibly most of your brain cells if you listen to talking heads on the internet. Especially if they have orange hair and no experience (me).

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