By Mike Thiessen - March 28, 2013 | Tickers: CCO, DML, UUU | Mike is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Well-known Canadian uranium miner, Uranium One (TSX: UUU), is in advanced takeover talks with state-owned Russian mining giant ARMZ. Already in control of about 51% of the company, the Russian firm has expressed interest in taking a 100% stake in Uranium One in a deal valued at about $1.3 billion.

Thanks to a deep downturn in the uranium market after the Japanese nuclear-plant disaster in early 2011, Uranium One's shares have lost more than half their value over the past 24 months, and appear ripe for the picking. Shareholders were willing to take their money off the table though, since 96% of them voted for the merger to occur. If the takeover is approved by regulators, it is likely to close by the end of the second quarter of 2013.

About Uranium One and ARMZ

With operations in Toronto and Vancouver, Uranium One is one of the world's most important uranium producers. The company conducts extensive exploration operations in Canada's western reaches as well as in central Asia, the U.S. state of Wyoming, and parts of western and southern Australia. It engages in some limited mining operations as well.

Since Uranium One's single most important and productive property is located in Kazakhstan, it serves as a natural target for Asia-focused ARMZ. In 2012, the company lost $29 million on an EBITDA of $259.5 million and gross revenue of $493.2 million.

Owned by the Russian government, ARMZ is a sprawling company that conducts exploration and mining activities for nearly a dozen different elements and materials. The bulk of the company's operations can be found in countries and regions of Eastern Europe and Northern Asia, including Siberia, Mongolia, Kazakhstan, and Ukraine. It also has substantial operations in Southern Africa, the Near East, and Canada. It is structured as a private subsidiary of Russia's State Atomic Energy Corporation, and does not report detailed income figures.

How the deal is structured

Under the terms of the deal, Uranium One shareholders would receive cash payments of $2.86 for every share of the company's stock that they own. Relative to Uranium One's pre-announcement closing price of $2.41 per share, this represents a premium of about 19%.

Relative to its current per-share price of $2.80, the deal offers a premium of about 2.14%. During late 2012, the company traded below $2 per share for an extended period of time. Shareholders who bought into Uranium One during this run stand to earn a return of 50% or more on their investments.

Complications and legal issues

As is customary, ARMZ's takeover bid was subject to approval from two-thirds of Uranium One's shareholders. In other words, the company needed about 15% of Uranium One's remaining shareholders to register their approval of the deal and they easily achieved it.

However, Uranium One's stock price has mirrored uranium's price collapse, and declined by about 60% since the Fukushima disaster. Some of the company's shareholders believe that uranium prices are artificially depressed, and may recover somewhat in the coming years. These individuals and institutions initially pledged to withhold their support for the deal in its current form.

Long-term outlook and prospects

As with any resource-focused company that concentrates its efforts on a single class of material, Uranium One's outlook is inextricably bound up with the price of uranium. In turn, the radioactive metal's fortunes turn largely on the future of the global nuclear power industry.

While many analysts point to heady nuclear-power growth in developing markets like China, others caution that the developed world is likely to turn away from this reliable, but potentially dangerous, source of energy over the next several decades.

Other Canadian uranium companies, like Toronto-based Denison Mines (TSX: DML) and Saskatoon-based Cameco (TSX: CCO), are already struggling mightily in the face of declining revenue from uranium production.

For its part, Cameco has been able to maintain its profitability thanks to a host of other auxiliary services that it performs. Cameco provides conversion services and fuel manufacturing. Denison, on the other hand, has been losing money due to the decline with an operating margin of (234)%. If the price of uranium does not mount a meaningful recovery, Uranium One and Denison will have to diversify in order to survive as an independent company.

The bottom line

In sum, Uranium One shareholders, who bought into the company as its value fell, stand to reap a profit from this deal. Those who have not yet bought into the company stand to earn a smaller premium of 2% on their short-term investment. In any case, Uranium One presents an interesting niche opportunity for seasoned market-watchers.