Mining company Rio Tinto has increased its offer to acquire all of uranium exploration company Hathor Exploration Limited’s common shares.
The renewed offer of C$4.70 (£2.82) per share, which comes through an indirect, wholly-owned subsidiary, values Hathor at approximately C$654m in an attempt to fend off a hostile bid by Cameco Corporation of C$4.50 per share.
A statement by Rio Tinto outlines a unanimous recommendation made by the board of Hathor for shareholders to accept the increased offer.
Shares in Hathor have leapt 75% since Cameco Corp’s first hostile offer of $520m in August.
A bidding war between Rio Tinto and Cameco is reported to have erupted and has led to accusations of “fear mongering” directed at Cameco over claims Hathor lacks the financial capacity to develop projects.
Hathor has also described offers by Cameco as opportunistic and Cameco of “leveraging the market capitalisation set-back in this industry post-Fukushima”.
Rio Tinto is the largest single holding in BlackRock’s £9.1 billion World Mining fund, managed by Evy Hambro. The company currently represents a 9.5% position in the portfolio.
Hambro previously signalled that he expected merger and acquisition activity such as this to pick up in the second half of 2011.
“The trends of more mergers and acquisition activity as well as returns to shareholders in the form of dividends and share buybacks are likely to get further traction in the second half of the year”, he said in a statement.
Hathor has described itself as “an unlikely takeover target” on the basis that no single shareholder can own more than 15% of the company and there is a 25% voting limitation on non-resident shareholders.
Hathor’s exploration projects are concentrated in the Athabasca Basin which has been responsible for between 20 and 30% of western world uranium mine production for the past 35 years.
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