DealTalk: Cameco may go unchallenged in hostile Hathor bid

Fri Sep 16, 2011 1:40pm EDT
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By Julie Gordon and Bhaswati Mukhopadhyay

(Reuters) - Hathor Exploration HAT.TO might have trouble finding a white knight to rescue it from the clutches of Cameco Corp, the uranium giant whose C$520 million ($530 million) hostile offer stands a much better chance of succeeding than any foreign bid.

Cameco, Canada's largest uranium producer, faces none of the hurdles that a non-Canadian company would have to clear in acquiring a strategic asset such as Hathor. Only last year, Canada's federal government shot down a $39 billion Anglo-Australian bid for Potash Corp, the world's largest fertilizer producer.

That's a calculation that is likely to give any rival bidder pause. Even so, Hathor's share price has shot higher since Cameco's bid was made public late last month, suggesting investors believe a sweeter offer may emerge.

Cameco's (CCO.TO: Quote) C$3.75 a share offer also makes a lot of economic sense, a second big deterrent to a rival bid. It is one of the few uranium producers with an established mill in the Athabasca Basin, a uranium rich area in northern Saskatchewan. Hathor's flagship Roughrider project is located there.

"The best bet for Hathor is whoever is going to pay the most. Is that going to be Cameco? Difficult to say, but I also find it hard to see other bidders emerging," said BMO Capital Markets analyst Edward Sterck.

The deal is not only important for Cameco as a way to accelerate its production stream. It also marks the first big acquisition attempt in the industry since the nuclear disaster at the Fukushima power plant in Japan last spring.

The partial meltdown of the reactor, triggered by a devastating earthquake and tsunami, sent shares of Canada's top uranium producers tumbling. The industry is now eager to regain some of the cache it lost in the aftermath of the disaster.

HATHOR'S NEWS FLOW   Continued...

<p>An aerial view of Cameco's Cigar Lake uranium mine site in northern Saskatchewan September 3, 2010. REUTERS/David Stobbe</p>