LONDON: Kalahari Minerals, the top shareholder in one of the world's largest uranium projects, has agreed to be taken over by its state-owned Chinese suitor in a cash deal valuing it at 632 million pounds ($991 million). In a purchase that will boost China's efforts to meet its growing energy needs, China Guangdong Nuclear Power Corp (CGNPC) will pay 243.55 pence for each Kalahari share. That represents a premium of around 16 percent on the average closing price for Kalahari shares for the six months prior to March 4, before China announced its intention to bid, but it is below a current share price at around 241.6 pence, indicating a counter-offer is considered unlikely.
The company said in November that it was in talks with its Chinese suitor over an offer at the 243.55 price below the original offer on the table when the two first began discussing a deal in March, before Japan's Fukushima nuclear disaster. In March, the two sides were in talks over 290 pence per share offer. Efforts to cut that price level to 270 pence after Fukushima were rejected by Britain's Takeover Panel, which demanded a six month interval before a fresh offer was made. After confirming its continuing interest in Kalahari last month, CGNPC had faced a deadline of 1700 GMT on Thursday to either confirm its offer or withdraw. "In the light of the unexpected circumstances in Japan and their impact on uranium equities, the Kalahari directors recognise the altered market dynamic and subsequently view the Offer from CGNPC-URC as attractive," Mark Hohnen, Kalahari's Executive Chairman said on Thursday.
"The Kalahari directors view CGNPC-URC as an excellent partner for the realisation of the full potential of the Husab uranium project to the benefit of all stakeholders." CGNPC, which has been seeking new sources of uranium supply, said its offer was conditional on shareholders representing at least 50 percent of shares taking up the offer. It already has letters of intent from investors representing 3.9 percent. Kalahari's key asset is a 42.74 percent interest in Extract Resources, the owner of the Husab uranium project in Namibia. Husab is potentially the second-largest uranium mine in the world. Exploration work is continuing on the project, currently the world's fourth-largest uranium-only deposit, with an updated resource estimate due next year.
Under Australian rules, CGNPC would be required to make a full takeover offer once it owns more than 20 percent of Extract, but the securities regulator can grant exceptions. Trading in Extract Resources was halted in Australia on Thursday ahead of the CGNPC statement. Rio Tinto holds an 11 percent stake in Kalahari and 14 percent of Extract. Extract and Rio Tinto have been discussing combining the Husab project with Rio Tinto's neighbouring Rossing uranium mine and analysts see the global miner potentially working with the Chinese in Namibia. Deutsche Bank is adviser to CGNPC, Azure Capital and Ambrian Partners are advising Kalahari, and Rothschild is advising Extract.
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