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Rio Wins Battle for Hathor as Cameco Says It Won’t Raise Bid

Cameco Chief Executive Officer Tim Gitzel
Cameco Chief Executive Officer Tim Gitzel said, “After careful consideration we cannot justify increasing the price.” Photographer: Daniel Acker/Bloomberg

Nov. 28 (Bloomberg) -- Cameco Corp., the world’s largest uranium producer, won’t raise its hostile bid for Canada’s Hathor Exploration Ltd. a second time to surpass a C$654 million ($633 million) friendly offer from Rio Tinto Group.

“We just decided that going above and beyond that was outside the parameters for us and too much to pay for that asset,” Cameco Chief Executive Officer Tim Gitzel said today in a telephone interview. “This company has a tradition of remaining disciplined in its acquisitions, and we did in this case.”

Cameco, based in Saskatoon, Saskatchewan, said today in a statement it will let its C$4.50-a-share bid lapse when it expires tomorrow. Rio has agreed to pay C$4.70 a share for Hathor, 76 percent more than Hathor’s closing price on Aug. 25, the day before Cameco made its initial offer. Hathor dropped 7.1 percent to C$4.69 in Toronto.

Acquiring Vancouver-based Hathor gives Rio a toehold in the Athabasca Basin, a uranium-rich region straddling Saskatchewan and Alberta where Cameco already operates mines. Hathor controls the Roughrider uranium deposit, which may contain about 78 million pounds (35.4 million kilograms) of the nuclear fuel, Bart Jaworski, an analyst at Raymond James in Vancouver, said in an Oct. 19 note. Hathor estimates it will cost C$567 million to develop a mine at the site.

‘Juiciest Property’

“It’s negative for Cameco because the juiciest property in the Athabasca Basin has now been given up to Rio,” Rob Chang, an analyst a Versant Partners Inc. in Toronto, said today in a telephone interview. “Hopefully something is being set up between Cameco and Rio to cooperate in consolidating the region.”

Gitzel declined to comment on whether Cameco and Rio discussed a joint acquisition of Hathor. Rio, based in London, is the world’s third-largest mining company and already mines uranium in Namibia and Australia. Hathor’s board unanimously recommended investors accept Rio’s offer.

The deal would be the fifth-largest company takeover completed by Rio, according to data compiled by Bloomberg. Hathor investors should tender their shares to Rio’s bid before it expires on Nov. 30, Rio said today in a statement.

Allowing Cameco’s bid to lapse won’t adversely affect the company’s plan to double annual uranium production to 40 million pounds by 2018, Gitzel said in his company’s statement.

“Our plan involves existing assets in our development pipeline and we remain on track to meet our objectives,” he said in the statement. “We will continue to explore other growth opportunities, but only where there is a clear benefit to our shareholders.”

Cameco rose 5 percent to C$18.23 in Toronto. Rio climbed 4.4 percent to 3,164 pence in London.

To contact the reporter on this story: Christopher Donville in Vancouver at

To contact the editor responsible for this story: Simon Casey at

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