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All Penny News: Denison Looks to Drop Hammer on Mega Uranium Efforts to Buy Rockgate Capital


Mississauga, ON -- (SBWIRE) -- 09/18/2013 -- Media, Inc. ( announces its latest article titled “Denison Looks to Drop Hammer on Mega Uranium Efforts to Buy Rockgate Capital.”

Companies mentioned in this article include Mega Uranium (TSX:MGA), Rockgate (TSX:RGT) and Denison Mines (TSX:DML) (NYSE MKT:DNN).

Article Excerpt:

Who doesn’t love a good takeover battle? Well, maybe the shareholders of Denison Mines Corp., as shares have been sliding since Tuesday’s announcement that they intend to counter the offer of Mega Uranium Ltd to acquire Rockgate Capital Corp. It doesn’t look like the markets are quite buying that a deal is set in stone either, with shares of Rockgate still more than ten percent away from the price that Denison was putting on the table.

Rewinding to June, Mega Uranium (TSX:MGA) and Rockgate (TSX:RGT) announced that they had penned a binding letter of intent to merge their companies into one diversified miner. Mega Uranium has uranium projects in Australia, Canada (the world’s largest uranium producer) and Cameroon, as well as base and precious metal properties in Canada and Brazil. Rockgate, a base and precious metal miner, controls four projects in Africa, including its Falea uranium and silver project.

Under the terms of the Mega/Rockgate agreement, Rockgate shareholders were to get 2.2 Mega shares for each Rockgate share held. Based on prices at that time, the implied value was 25 cents per Rockgate share, which represented a 36-percent premium to Rockgates 20-day VWAP (volume weighted moving average). In August the LOI was upgraded to a definitive agreement to merge the companies. At that point, shares of Rockgate had slumped all the way down to around 15 cents each. Shareholders also didn’t seem to be keen on the idea that Mega was intending to affect a reverse split upon the merger, making the exchange ratio effectively 2.2 shares of Mega for each 10 Rockgate shares. Mega shares were at 10 cents at that time, putting the deal at about 22 cents per each Rockgate share. Today, Mega shares are at 8 cents.

The definitive agreement has a $1-million break fee. Mega and Rockgate shareholders were expected to vote on the deal next Wednesday.

Enter Denison Mines (TSX:DML) (NYSE MKT:DNN), a much larger company ($494.9 million market cap) than Mega Uranium ($21.4 million market cap). Denison said that it intends to make a takeover bid for Rockgate in exchange for its shares, saying it intends to offer 0.192 shares of Denison for each Rockgate share. Based on prices at the time, this implies a value of 23 cents per share for Rockgate and a total purchase price of $26.7 million and represents a 47 percent premium over Rockgate’s closing price on Monday. It’s also 38-percent higher that Mega offered based on Monday’s closing price and exchange ratios.

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