Murray & Roberts (M&R) confirmed on Wednesday that it would be meeting with its largest single shareholder, ATON, to discuss the merits of M&R’s proposed acquisition of Aveng, which it continues to describe as “highly strategic”.
No date has been provided for the meeting, which is being pursued notwithstanding ATON’s stated opposition to the Aveng transaction, which it believes imposes “significant and unpredictable risk” to M&R.
The meeting will also proceed despite the German group’s firm intention to make a mandatory offer to buy, for R17 a share, all the shares in M&R it does not already own. ATON currently holds around 44% of the JSE-listed engineering and construction group.
When Engineering News Online approach ATON to confirm the meeting, the company said it "does not comment on any communication with M&R".
Speaking during an investor conference call, M&R chairperson Suresh Kana said that the board had noted ATON’s adverse commentary on the proposed Aveng transaction.
Nevertheless, a meeting would take place to “discuss the merits of the potential transaction, with the aim of securing ATON’s support”.
“The Aveng transaction is highly strategic and has the support of the majority of M&R’s minority shareholders,” Kana claimed.
M&R would, therefore, push ahead with the potential Aveng transaction, including securing all necessary shareholder and regulatory approvals.
In line with Section 126 of the Companies Act, shareholders would be asked to vote on June 19 to “cure” the Aveng deal of any “frustrating action” implied by M&R pursuing a transaction while the company was under offer. M&R insists that talks on the proposed Aveng acquisition predate the ATON offer and should, thus, not be perceived as an attempt to frustrate ATON’s bid.
However, the Takeover Special Committee (TSC), which was convened to adjudicate complaints by both M&R and ATON regarding ATON’s initial offer and M&R’s response, found M&R’s independent board to be in contravention of sections in the Companies Act designed to prevent actions designed to impede, frustrate or defeat an offer. In a ruling, the TSC also barred CEO Henry Laas from making further public statements regarding the offer.
The TSC also directed ATON to withdraw its voluntary offer to M&R shareholders and ordered that it be made a mandatory offer on the same or similar terms to those contained in the ‘Forward Sale Agreement’ entered into between ATON and Allan Gray. The M&R board described the ruling as positive for shareholders, as it removed the preferential treatment hitherto enjoyed by Allan Grey over other minority shareholders.
“The board of M&R continues to seek to engage with ATON in good faith around the Aveng transaction. It continues to believe strongly in its strategic merits and its benefits for all shareholders and that the transaction is aligned with what ATON has set out as its strategic rationale for acquiring M&R,” the board asserted during the conference call.
He added that it would also be seeking clarity from the Takeover Regulation Panel regarding the TSC’s ruling preventing Laas from commenting on the offer.
Members of the board and management team, including Laas, would participate in the meeting with ATON.
In parallel, the M&R board would review the terms of ATON’s new mandatory offer when it became available and would provide further guidance to the market should the need arise.
However, for the time being the independent board was advising shareholders not to accept the revised offer price of R17 a share, which “remained too low”. The board argues that R20 to R22 a share represented the “fair-value range”.
The board was also of the view that ATON’s higher price had not materially improved the prospects of minority shareholders accepting the offer.
“Albeit that ATON owns 44% in M&R, it has become increasingly difficult for ATON to find support even at the increased price of R17, given that the M&R shares are tightly held among a relatively small group of shareholders, requiring ATON to enter into negotiations,” Kana said.
The independent board recommended that shareholders “take no further action at this time”.