Winston’s Growth Stock Report

Your Source for High Potential Stocks

Issue 30 August 26, 2011

Hathor (HAT, TSX) Hostile Takeover Bid by Cameco Ignites Shares

The big news of the summer rocked an otherwise sleepy market today as Cameco announced a low ball bid on Hathor shares. After talks with Hathor to negotiate an offer to buy the Roughrider discovery stalled, Cameco is now playing hardball.

Cameco’s press release summarized the offer:

• All-cash offer of $3.75 per Hathor share
• Premium of 40% over Hathor’s closing share price and 33% over Hathor’s 20-day volume-weighted average price as at August 25, 2011
• Immediate liquidity and elimination of risk for Hathor shareholders

Though the 40% premium looks good on paper, it fails to address the potential of the discovery area. Specifically, a Scoping Study should be coming out near the end of September which will reveal a much clearer picture of the potential of Roughrider. Clearly has not been accounted for in the Cameco offer.

It will be interesting to see if Cameco’s tactic will work out for them in terms of actually acquiring this strategically located deposit, very close to their mill and existing operating area.

We may see some other suitors step forward with more realistic offers over the coming weeks. It should be good fun. The bottom line is the deal won’t get done at this price. I think we are looking at a $5 buyout here and that’s my lowball number.

When comparing this offer to Uranium One’s takeover bid for Mantra last March, it doesn’t come close. It’s more than likely Cameco will have to come back and sweeten the deal. If they don’t, someone else will.

Hold onto your HAT!

Cheers,

Jam