Fission retail investors end Denison merger plan
Shareholders block $321M deal
TORO N TO Retail investors from Canada and around the world have blocked the proposed merger of Denison Mines Corp. and Fission Uranium Corp., a rare case in which the retail crowd got their way over large institutional investors.
“What I learned is that our shareholders are very passionate people,” Fission chief executive Dev Randhawa said in an interview.
The two junior uranium miners announced Tuesday that more than half of Fission’s shares were voted in favour of the friendly transaction, but the number fell short of the two-thirds majority needed to close the deal. Toronto-based Denison wanted to buy Kelowna, B.C.-based Fission for $321 million in stock.
Fission’s institutional shareholders were strongly supportive of the deal. But retail investors own roughly 80 per cent of the stock, and many of them were fiercely opposed. They got together and voiced their displeasure online. They thought the bid did not offer nearly enough value for Fission’s Patterson Lake South (PLS) project, which is one of the best ura- nium discoveries in Saskatchewan in decades.
Denison is one of mining kingpin Lukas Lundin’s companies. Last week, he travelled to Toronto to address Fission’s retail investors in person and try to convince them that the merger was in their best interests. It was an unusual move on his part, and it ultimately wasn’t successful.
“We are, of course, pleased with the result,” said Jim Gifford, a retail shareholder who created the “FCU Oversight” group to mobilize support against the merger.
“It’s really a credit to the retail shareholders of Fission who made it their business to dig in and understand the nature of the deal.”
If successful, the deal would have combined two of the best undeveloped uranium assets in Saskatchewan’s Athabasca Basin (Fission’s PLS project and Denison’s Wheeler River project). Lundin said it would create the “go-to name” in the industry once uranium prices recover. His son, Adam, proposed the deal and worked hard to put it together.
Both companies stressed they will be fine without this merger. They each have cash and plenty of work to do on their separate projects.
Denison CEO David Cates said he was disappointed, but that the company’s long-term strategy hasn’t changed.
“This won’t be the first deal that doesn’t happen that might make sense,” he said in an interview.
Fission shares rallied seven per cent on Tuesday to close at 74 cents.