“Cameco has remained disciplined through the bid process to ensure that we make the best decisions for our company and its shareholders.”
The decision puts an end to a three-month battle for Vancouver-based Hathor, which began when Cameco made a hostile all-cash bid in late August, valuing the company at $3.75 per share, or about $520-million.
Rio countered two months later by striking a friendly deal with Hathor worth $4.15 per share in cash. Cameco countered at $4.50, and Rio then returned with an offer of $4.70 in cash, valuing Hathor at $654-million.
Rio's offer will be the winner if approved by Hathor shareholders. The Hathor board has recommended Rio's offer.
Rio also said last week it has gained clearance to buy the company from Canada's competition bureau. Rio has said Investment Canada approval isn't needed. Investment Canada officials said recently they wouldn't comment on specific takeover bids.
The fight between Rio, the world’s second-largest mining company, and Cameco, the world’s largest uranium producer, helped send Hathor’s shares hit a record high of $5.10 last week on the Toronto Stock Exchange. The stock closed at $5.05 on Friday.
The companies were vying for Hathor's assets in the uranium-rich Athabasca basin in northern Saskatchewan, home to 20 per cent of global uranium production. Hathor's assets, including its flagship Roughrider deposit, have been on the radar of both Rio and Cameco for years, but the drop in uranium prices and equities earlier this year as a result of the Japanese nuclear crisis has created an opportunity for them to try to buy the company.
Rio's friendly deal with Hathor included a right to match, providing an upper hand in any bidding war.
Buying Hathor will not only give Rio a foothold in one of the world's best uranium producing regions, but will allow it to expand its production currently located in Australia and Africa. Analysts also expect Rio to move deeper into the Athabasca basin by acquiring more assets down the road.
Rio's entrance into the basin is considering a blow for Cameco's dominant position in the region. Not only could it lose its balance and power in the region, but Rio could also poach expert staff to help develop and grow its business there.
Cameco said allowing its Hathor bid to lapse will not impact its plan to double annual uranium production to 40 million pounds by 2018.
“Our plan involves existing assets in our development pipeline and we remain on track to meet our objectives. We will continue to explore other growth opportunities, but only where there is a clear benefit to our shareholders,” Mr. Gitzel stated.
The deal is Rio's first since making an ill-timed $38-billion purchase of Alcan in 2007, just before the global credit crisis hit.
Rio also controls Iron Ore Co. of Canada, Canada's largest iron miner as well as the Diavik diamond project in the Northwest Territories. It also has a partnership to explore for potash deposits in Saskatchewan.
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