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Updated: Fission offers $170-million share deal to take out Alpha; JV partner responds

by Greg Klein | August 26, 2013

The 50/50 joint venture that brought Patterson Lake South to fame now has one partner trying to take over the other. Fission Uranium TSXV:FCU announced August 26 it might directly approach shareholders of Alpha Minerals TSXV:AMW to acquire all their stock. Fission stated Alpha management “has not engaged with us in meaningful discussions” following a proposal made August 23. That proposal expired two days later.

On offer are 5.3 Fission shares for each Alpha share. Based on Fission’s August 23 close of $1.37, the proposed deal would come to $7.26 per Alpha share or about $170.44 million altogether. Alpha would get the right to nominate two Fission directors.

Fission’s rationale is that one of the world’s most celebrated junior exploration projects needs to “send a strong message to the market that the future for the PLS discovery is very promising.” Saying it is “the only logical buyer for Alpha,” Fission argued “the combined company could represent an attractive takeover target for a buyer seeking to acquire 100% control of the PLS project.”

Fission added that “several stakeholders, including some of Fission’s and Alpha’s largest shareholders, have independently expressed support for a consolidation of PLS within Fission.”

Besides PLS, Fission has interests in six other Athabasca Basin uranium projects and one in Peru. Alpha’s other interests include three Basin projects and two gold properties.

Dundee Capital Markets acts as Fission’s financial adviser while Blake, Cassels & Graydon LLP serves as legal counsel.

Update: By late afternoon August 26 Alpha issued a news release saying it requested additional time to study Fission’s proposal, which was received at 4 p.m. PT Friday, August 23, and expired the following Sunday afternoon.

“Alpha also raised concerns about the timing of the proposal in relation to the ongoing active and very material drill program at PLS,” the news release stated. The company “has been an active participant in an ongoing dialogue with Fission over the past several months regarding consolidation…. Alpha and its advisers look forward to continuing this dialogue with Fission on the matter of consolidating PLS and maximizing shareholder value.”

Alpha has struck a committee of three independent directors and engaged Raymond James Ltd as its financial adviser. Miller Thomson LLP acts as legal counsel to Alpha and Gowling Lafleur Henderson LLP as legal adviser to the committee.

Alpha shares opened August 26 at $7.14, 29 cents above their previous close, reached a 52-week high of $7.37 and closed on $7.25.

Fission shares opened August 26 at $1.33, four cents below their previous close, dropped to $1.30 and then hit a 52-week high of $1.48 before closing on $1.42.

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