* Russia state company consolidating base in ex-Soviet Union
* Deal values Uranium One at $2.8 bln, C$2.86/share
* Shares close up 14.52 pct to C$2.76 on TSX
By Melissa Akin and Julie Gordon
MOSCOW/TORONTO, Jan 14 Russia's state uranium
company has agreed to pay C$1.3 billion (US$1.32 billion) to
take Canada's Uranium One Inc private, as the successor
to the Soviet Union's nuclear industry seeks to strengthen its
grip on supplies.
Atomredmetzoloto and its Effective Energy N.V. affiliate -
together known as ARMZ - said on Monday they would buy the
shares of Uranium One they do not already own in a deal valuing
Canada's No.2 uranium producer at C$2.74 billion ($2.8 billion).
The deal sent the stock up more than 14 percent on Monday to
close at C$2.76 on the Toronto Stock Exchange. That was below
the C$2.86 per share offer price, suggesting some uncertainty
over the outcome.
ARMZ currently owns 51.4 percent of Uranium One's common
shares. If successful, the full takeover would help ARMZ
consolidate control over uranium assets in the former Soviet
Union and also strengthen access to reserves in Australia and
the United States.
It will also leave just two major publicly listed, pure-play
uranium producers - Canada's Cameco Corp and France's
Demand for uranium, used mainly as fuel for nuclear
reactors, has come under pressure since the March 2011
earthquake and tsunami in Japan triggered a meltdown at the
Fukushima-Daiichi atomic power plant.
The disaster led countries such as Germany and Japan to back
away from nuclear power. China, India and Russia are all pushing
ahead with new reactors, but in a more measured fashion.
The price of uranium price has fallen from about $68 a pound
before Fukushima to around $43, while shares of Uranium One have
more than halved in value.
Announcing plans to delist the Canadian company, ARMZ
Chairman Vadim Zhivov said the stock market had offered
"considerably broader opportunities for development" when the
Russian company acquired its controlling stake in 2009.
"Now, the situation has changed and the private format is
more effective for meeting the challenges in front of us,"
Zhivov said in a Russian-language statement.
Uranium One's operations are focused in Kazakhstan, where
ARMZ is also building up its asset base.
Kazakhstan is the world's top uranium producer, with more
than double the output of No.2 producer Canada in 2011, data
from the World Nuclear Association showed. Its output quintupled
between 2004 and 2011.
Toronto-based Uranium One is also the operator of the Mkuju
River project in Tanzania.
ARMZ is the mining arm of Russia's nuclear regulator,
Rosatom, which also builds nuclear reactors both at home and
Russia currently has 33 operating reactors and 10 reactors
under construction, according to the World Nuclear Association.
There are 435 reactors operating around the world, with 65 under
construction and another 167 in the planning stages.
The move to take Uranium One private has sparked some
concern that uranium supply available to other consumers would
dry up, said Rob Chang, an analyst with Cantor Fitzgerald in
"Technically the supply is still there," said Chang. "But
now that ARMZ has full control, I'm not sure what's going to
stop them from sending all that material into Russia."
That could prove worrisome for utilities in China, Japan and
the United States that were expecting at least part of their
uranium supplies to come from Uranium One.
It could also give Rosatom an edge in selling new reactors,
as the state-owned company can ensure future supply as part of
its sales deal, said Chang.
The transaction, already approved by Uranium One's board, is
expected to be completed in the second quarter of 2013, the
company said in a statement.
The deal includes a non-solicitation covenant, under which
Uranium One will not seek other bids, as well as a right for
ARMZ to match any rival offers. It also requires Uranium One to
pay a termination fee equal to C$45 million under certain
Canaccord Genuity Corp was the financial advisor to the
independent committee that was set up by the Uranium One board
for this deal, while ARMZ was advised by BMO Capital Markets.