November 20, 2024
Fission Uranium Corp. (TSX:FCU, Under Review, David A. Talbot) is currently in the process of being acquired by Paladin Energy Ltd. (ASX:PDN, Not Rated) in an all-stock deal (read note). The Federal Gov’t, through the Minister of Innovation, Science and Industry, has extended the national security review period until 30-Dec-24, claiming it needs more time to complete the review. Fission management continues to engage with the Minister as part of section 25.3 of the Investment Canada Act (ICA). In its short press release, Fission has clearly warned investors that there can be no certainty that of obtaining ICA clearance in a timely manner or at all. Failure to obtain ICA clearance would prevent the merger from being successfully completed. We recently dropped our rating from TENDER to UNDER REVIEW given this uncertainty and the significantly lower implied offer price given the fall in Paladin Energy shares by that time (read notable). We noted that there were several outcomes of this deal, including having the deal halted by the Feds or scuttling the deal via a material adverse effect. We doubt that the Canadian Gov’t would base their decision on a possible rebound of FCU’s share price if the deal fails, though, seeing undervalued Canadian assets sold off to foreign companies would be undesirable. This announcement will likely keep Fission Uranium shares tethered to the performance of Paladin Energy shares. Fission Uranium currently trades at a 11% premium to the offer while Paladin and Fission are down 40% and 16%, respectively, since the deal was announced. FCU’s stock did rise by 8% yesterday, possibly on the back of investors betting on the stock rebounding if the deal falls through or a recovery in Paladin’s share price. The FCU/PDN stock price ratio has been at the high levels it reached when we put the rating under review. Read more
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Fission Uranium Corp. – TSX:FCU – 1,2,3
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