Canada orders national security review over CGN's 11.26% opposition to Paladin-Fission deal


Paladin Energy (ASX:PDN) has confirmed to the market its attempted takeover of TSX-listed Fission Uranium Corp was blocked by a Chinese shareholder late last month.

Under Canadian law, Paladin has to enter into a legal process to acquire Fission Uranium; all in all, a court must approve a takeover plan. Paladin – WA-based and with a market cap over $3B – moved to snatch Fission back in June.

The only problem is, last month, a subsidiary of China General Nuclear Power (CGN) indicated it would use its 11.26% shareholding in Fission to block the deal. And on the 26th of September, Paladin reported on Wednesday, that’s exactly what happened.

The hearing wherein CGN opposed the takeover was the final hearing of the process required under relevant Canadian laws, so in that light, Paladin is now waiting for a final decision from the same court “in the coming weeks.”

But here’s where it gets interesting: Paladin confirmed on Wednesday it had received a notice from Canada’s industry Minister ordering a national security review of the court’s plan of arrangement, under a further series of Canadian investment laws.

On its website, the relevant agency describes national security reviews as tools allowing the federal government to review any foreign investments to ensure “overall economic benefit to Canada” – including risks of “national security harm.”

That’s about all we know for sure. Paladin, for its part, was keen to remind on Wednesday nothing is yet set in stone.

“There can be no certainty … that the arrangement will be successfully completed,” Paladin wrote on Wednesday.

What exactly CGN gets out of its opposition to the takeover is unclear, though, it perhaps makes a kind of sense: if 100% of Fission is gobbled up by an Australian company, then CGN loses its exposure to a nuclear energy project in Canada.

And with the current geopolitical landscape being what it is, it’s unlikely CGN would be able to keep any ties to that project.

That appears to be the motivation over financial concerns. Paladin’s ultimate deal for Fission offers it a premium around +26% to what it traded around the time the offer was made.

Canadian competition regulators have already OK’d the deal, and, nearly 70% of Fission shareholders have already indicated approval. The deal is perceived by the company to be on the cusp of approval, but clearly, CGN don’t feel that way.

PDN last traded at $11.77/sh.

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