Summit: Areva to lose out

Monday, 23 April 2007 The takeover story between Australia's Summit Resources and Paladin has grown increasingly acrimonious: A Summit statement has said that the company's deal with Areva will not proceed.

Summit Resources controls the Valhalla uranium deposit in NW Queensland, with 26,000 tonnes U3O8 as indicated and inferred resources, and the strong possibility of more. It also counts 11,500 tonnes of resources as its part of the Isa Uranium Joint Venture.

Last year another Australian company, Paladin, bought a 50% interest in the joint venture, irking Summit, which believed it had right of first refusal on the share and prompting a legal battle. In February Paladin launched a hostile takeover bid for Summit with the aim of bringing several prospective properties under Paladin's full ownership.

That A$1 billion ($792 million) offer was rejected by Summit as "opportunistic and inadequate," and the company went on to make a 'strategic alliance' with Areva whereby the French company would buy 9% of Summit, with the option of taking up to 18%. Paladin said Areva's participation would "go some way to bridging the capability gaps and nuclear industry inexperience" within Summit and submitted a raised offer of A$1.18 billion ($1.34 billion) on 17 April.

At that time, World Nuclear News reported that the impact the takeover would have on the Summit/Areva agreement was "unclear", but heard from Areva sources at the World Nuclear Fuel Cycle 2007 meeting in Budapest Hungary, 17-20 April, that the deal remained firm.

Now, a 23 April Summit statement has said that its directors had sold their shares to Paladin, increasing its voting rights to 18.7%. "As a result of these developments," Summit said, "the Areva transaction announced on 11 April will no longer be put to shareholders for approval, and will therefore not proceed."

Areva managers do not agree with Summit's logic. Philippe Portella, managing director of Areva's Australian uranium operation, told Bloomberg: "We have a binding contract... The transaction is still valid," and that Areva is "assessing its position."

World Nuclear News understands that Summit's decision applies to both the announced purchase of 9% - which was to be put to shareholders in May - and the subsequent 9%, previously 'expected' by Summit, which would have carried with it the right for Areva to market two thirds of Summit's uranium.

Further information

Areva
Paladin Resources
Summit Resources