By: Dylan Sikes - AllPennyStocks.com News

Wednesday, February 26, 2014

Merger and acquisition activity is starting 2014 at a steady pace and most seem to believe it is going to continue. A report published by Pepperdine Private Capital Market Project, International Business Broker Association and M&A Source showed that 87 percent of brokers surveyed projected an increase in completed deals this year as compared to 2013. There has been no shortage of megadeals already this year; that’s for sure. Facebook (Nasdaq:FB) agreeing to spend $19 billion (including restricted stock) to acquire WhatsApp was the fifth-largest tech merger of all time. February has also featured Comcast (Nasdaq:CMCSA) saying it will pay $69.3 billion for Time Warner Cable (NYSE:TWC) and Forest Laboratories (NYSE:FRX) agreeing to be bought by Actavis, Inc. (NYSE:ACT) for $25.5 billion. There’s already been 37 deals with price tags over $1 billion, setting the stage for acquisitions to possibly top the $1-trillion mark for the second straight year in 2014. While those megamergers get all the headlines, there are countless other deals happening as well as smaller firms join forces. On Wednesday, Powertech Uranium Corp. (TSX:PWE) entered into a share purchase agreement with privately held Azarga Resources Limited in which Powertech is acquiring all of the issued and outstanding shares of Azarga in trade for common shares of PWE. Azarga currently has a large stake in Powertech, owning almost 69 million of the 152.95 million shares outstanding, or 45 percent of the company.

Per the agreement, 3.65 shares of PWE are equal to 1 share of Azarga. With the deal, there will be about 364 million outstanding shares of PWE with another 55 million outstanding stock options and warrants to issue another 55 million shares. Powertech intends to do a reverse split to consolidate the shares once the deal is done, which is anticipated by the end of July.

Both boards have approved the transaction. Powertech intends to call a shareholder meeting seeking additional approvals.

Upon completion of the merger, Azarga will become a wholly-owned subsidiary of Powertech, operating under the new name Azarga Uranium Corp. With the payment in shares, Azarga shareholders will control about 77 percent of Powertech.

Powertech will continue to be run by president and chief executive Richard Clement and COO John Mays, with Azarga’s Curtis Church and Blake Steele joining the executive team as VP International Operations and CFO, respectively. Eight current board members at Azarga would join the board of directors at Powertech. A key figure in this equation is Alexander Molyneux, the current chairman of Azarga, who will take the chairman job at Powertech. Molyneux was formerly the chief executive at SouthGobi Resources, the largest coal producer in Mongolia, and head of Metals and Mining Investment Banking, Asia, at Citigroup (NYSE:C).

"The scale, diversification and committed financing associated with this Transaction creates a uranium play that provides shareholders with diversified exposure to a recovering sector," said Molyneux in a prepared statement today.

Powertech is primarily focused on its Dewey Burdock ISR uranium project in North Dakota, which is expected to get permitting to start on the mine in the next three months. Azarga owns 80 percent of the Kyzyl Ompul, the largest uranium deposit in Central Asia’s Kyrgyz Republic.

Azarga also brings interest in two other projects to Powertech. With a 34-percent stake, Azarga is the largest shareholder in Australian-listed Black Range Minerals, which owns the Hansen/Taylor Ranch deposit. Azarga also has 12-percent ownership of Australia-listed Anatolia Energy Ltd., which owns the Temrezli Uranium Project in Turkey.

Azarga also has $2.1 million in cash and $11 million in undrawn capacity under a note from Blumont Group Limited that converts at 15 cents per share, representing a 87.5-percent premium to the 8-cent closing price of PWE on Tuesday.

"Azarga has been our largest shareholder and main financier since mid-2013. The merger importantly brings cash and undrawn financing facilities with its assets that puts Powertech in a much more robust position moving forward," commented Richard Clement in today’s announcement.

Shares of PWE are trading flat at 8 cents with a high of 8.5 cents in Wednesday action. The share price may not have surged, but volume certainly has, rising to about 2 million to handily top the daily average of 147,277 for the past three months.

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