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The Globe and Mail

Duel for Hathor just like battle for Baffinland

File phot of men working about 600m (1,969 feet) below the surface at the Cameco McArthur River uranium mine site in northern Saskatchewan.

© STRINGER Canada / Reuters/REUTERS

The parallels are eerily similar. A Canadian company launches a hostile bid for a rival firm that operates within its own borders, but is brushed off. Then a global giant swoops in, sweetens the pot, and gets backed by the target's board. Frustrated, the Canadian bidder has to increase its price.

The story played out a year ago, and it's taking place yet again today. The only differences are the names, and the commodity up for grabs. In 2010 it was Nunavut Iron Ore fighting ArcelorMittal; this year it's Cameco fighting Rio Tinto . Last year iron ore was the hot commodity; this year it's uranium.

At this point, no one knows how it will end. On Monday, Cameco increased its hostile bid for Hathor Exploration to $4.50 per share in cash, 8.4 per cent higher than Rio's bid worth $4.15 per share made last month. But just like Nunavut last year, Cameco has to fight against a behemoth that has the backing of the target's board.

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However, as the Globe's Brenda Bouw points out this morning, Cameco has $1.2-billion in cash on its balance sheet, so there is room for the company to keep bidding. That could lead to a duel, akin to what played out in 2010.

Except last year's ended in a very unique manner: the two sides came together, after Nunavut reached out to Arcelor, and they ultimately put together a joint offer that was accepted. Today, Arcelor owns 70 per cent of Baffinland, and Nunavut owns the remaining 30 per cent, and they are working on developing the Mary River project together. How Canadian.

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About the Author
Reporter and Streetwise columnist

Tim Kiladze is a business reporter with The Globe and Mail. Before crossing over to journalism, he worked in equity capital markets at National Bank Financial and in fixed-income sales and trading at RBC Dominion Securities. Tim graduated from Columbia University's Graduate School of Journalism and also earned a Bachelor in Commerce in finance from McGill University. More

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