JSE-listed Murray & Roberts’ (M&R’s) independent board review has concluded that German investment holdings company Aton's planned offer of R15 a share is “opportunistic” and that Aton is unlikely to successfully delist M&R after the takeover.
M&R reported on Tuesday that Aton’s proposed cash offer, announced on Monday, was made at a time of unprecedented share price weakness as a consequence of low liquidity, declining valuations of its legacy peers in the construction sector and halting of the company’s share buyback programme in 2017.
When the proposed offer was announced, the company’s share price rose to R14.52 a share, from Friday’s close of R9.64 a share. On Tuesday, the stock closed at R13.45 apiece.
The independent board believes that the offer price of R15 a share “materially undervalues” the company, based on its prospects.
Aton increased its shareholding in M&R to 29.9% between February and April 2017.
In a scenario where Aton accretes its shareholding, but does not delist M&R, it presents risks to M&R shareholders and Aton, including conflicts of interest (in its mining business where the two companies’ interests overlap); strategic misalignment; and reduced strategic flexibility.
“It is not clear how Aton proposes to manage the dilution of M&R’s broad-based black economic empowerment ownership credentials and the potential resultant impact on material contracts and employment,” the board said.
The independent review board comprised non-executive directors Suresh Kana, Ralph Havenstein, Alex Maditsi and Diane Radley.
M&R has appointed BDO South Africa as independent expert to prepare and issue a report as to whether the proposed offer is fair and reasonable.
Aton has indicated that it will post an offer circular to M&R shareholders on April 5.
M&R has recommended that shareholders do not take any action.