June 22 (Bloomberg) -- Paladin Energy Ltd. rose the most in three months in Sydney after Citigroup Inc. said the uranium producer may be “vulnerable” to a takeover.
The Perth-based company gained 5.2 percent to A$2.41 at the 4:10 p.m. close in Sydney, the most since March 18. That compared with an increase of 0.5 percent for the benchmark S&P/ASX 200 Index.
Paladin, which operates the Langer Heinrich mine in Namibia and the Kayelekera project in Malawi, has slumped 50 percent in Sydney since the March 11 earthquake and tsunami in Japan damaged reactors at the Fukushima Dai-Ichi power station. The crisis triggered concerns that countries would delay nuclear power expansion plans, reducing demand for uranium.
“Paladin’s declining share price has made it more vulnerable to a potential takeover,” Citigroup analysts led by David Haddad said yesterday in a report. It may be “attractive to Chinese, Russian, Indian and South Korean producers and utilities seeking long-term uranium supply.”
The company’s shares were upgraded by Citigroup to “buy” from “hold,” while the broker kept a “hold” rating on shares of Energy Resources of Australia Ltd., operator of the Ranger mine in Australia’s Northern Territory.
“While sentiment towards uranium stocks is poor, we do not believe Paladin’s share price accurately reflects the fundamentals of the industry and see the company offering good long-term value at current price,” the analysts said.
Any bid may value Paladin at about A$4 a share or A$3.1 billion, Citigroup said.
--Editors: Keith Gosman, Amit Prakash.
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