Top Stories This Week: Gold Hits US$1,800, UEC and Denison Fight for UEX

Uranium M&A heats up in UEX bidding war

Moving on from gold, let's take a look at the uranium sector, where Uranium Energy (NYSEAMERICAN:UEC) and Denison Mines (TSX:DML,NYSEAMERICAN:DNN) are engaged in a bidding war for UEX (TSX:UEX,OTCQB:UEXCF).

To recap, in mid-June, UEC announced plans to acquire UEX in a deal that it said would create the largest diversified North America-focused uranium company; Denison then put in a competing bid on July 28. That offer from Denison ultimately expired, and UEX and UEC shared an amended agreement on August 8.

It seemed like that might be the end, but the next day Denison made another proposal to acquire UEX. UEX considers the new Denison proposal superior to UEC's latest offer, meaning that UEC has five business days from August 9 to respond. At the time of this writing on Friday (August 12) it had not made a move.

The situation is developing quickly, but as it stands, under the new Denison offer, UEX shareholders would receive 0.32 Denison shares in exchange for each UEX share held. According to Denison, that's an implied purchase price of C$0.51 per UEX share, on a spot basis, as of the market close on August 8.

"In making this further offer, we recognize that UEC remains in the 'driver's seat' through its right to match, and that our offer may not ultimately prevail.

That said, we believe that the UEX assets are so complementary to our own portfolio and Athabasca Basin specialization that it would be short-sighted not to afford another opportunity for both Denison and UEX shareholders to prosper from this combination" — David Cates, Denison Mines

With the battle for UEX in focus, we asked our Twitter followers this week if they expect to see more M&A in the uranium sector moving forward. There are relatively few uranium companies out there after years of low prices, so I thought this might be a tricky one to answer — but the vast majority of respondents said yes.

We'll be asking another question on Twitter next week, so make sure to follow us @INN_Resource and follow me @Charlotte_McL to share your thoughts! We'll also keep you posted on the competition for UEX.