UPDATE 2-Russia's ARMZ to take Uranium One private for $1.3 bln

* Russia state firm consolidating base in ex-Soviet Union

ARMZ founded as successor to Soviet nuclear ministry

* Deal values Uranium One at $2.8 bln

* Deal represents 19 pct premium Friday closing price

* Transaction to be completed in Q2 2013-Uranium One

By Melissa Akin and Avik Das

MOSCOW/BANGALORE, Jan 14 (Reuters) - Russia's state uranium firm has agreed to pay $1.3 billion to take Canada's Uranium One Inc private, as the successor to the Soviet Union's nuclear industry seeks to strengthen its grip on supplies.

Atomredmetzoloto and affiliate Effective Energy N.V. - together known as ARMZ - said on Monday they would buy the shares in Uranium One they do not already own in a deal valuing Canada's No.2 uranium producer at C$2.74 billion ($2.8 billion).

ARMZ, which along with affiliates currently owns 51.4 percent of Uranium One's common shares, will pay C$2.86 per share, a premium of 19 percent over the stock's Friday close.

The C$1.33 billion deal will help ARMZ consolidate control over uranium assets in the former Soviet Union, and also strengthen access to reserves in Australia and South Africa.

Uranium One's business is focused in Kazakhstan, where ARMZ has also been building its asset base.

Kazakhstan is the world's top uranium producer, with more than double the output of No.2 producer Canada in 2011, data from the World Nuclear Association showed. Its output quintupled between 2004 and 2011.

Toronto-based Uranium One is also the operator of the Mkuju River project in Tanzania.

ARMZ is the mining arm of Rosatom, Russia's nuclear regulator. The company was formed as the successor to the Soviet nuclear ministry, then reformed to specialise in uranium mining as well as rare and rare earth metals.

The deal includes a non-solicitation covenant, under which Uranium One will not seek other bids, as well as a right for ARMZ to match any rival offers. It also requires Uranium One to pay a termination fee equal to C$45 million under certain circumstances.

The transaction, approved by Uranium One's board, is expected to be completed in the second quarter of 2013, the company said in a statement.

Canaccord Genuity Corp was the financial advisor to the independent committee that was set up by the Uranium One board for this deal, while ARMZ was advised by BMO Capital Markets.

Uranium One shares closed at C$2.41 on Friday on the Toronto Stock Exchange.