Company Comment:
German family investment company Aton’s firm offer for all of the ordinary shares in the once leading Murray & Roberts engineering group might be a sign of things to come.
SA’s listed constructionsector stocks have been in a slump for years, with only Wilson Bayly Holmes-Ovcon keeping its head above water. That has made most of them so cheap that foreigners must have noticed.
In the case of Murray & Roberts, Aton started accruing shares in late 2015 and now has a 39.6% stake in the company, augmented by a 6.5% chunk of Allan Gray investor stakes in the group. This gives Aton 39.8% of voting rights.
Some analysts see the R15 a share offer as way too low. For others, this is not the case at all. The Murray & Roberts independent expert reckons a controlling stake is worth at least R20 to R22 a share.
With the offer now made, expect the market to start rapidly finding a price at which Aton might get the controlling share it wants.
So far, Aton says its R2bn stake in Murray & Roberts has been jeopardised by, among other things, a 70% drop in the value of Clough, its oil and gas operator in Australasia. It also says the Murray & Roberts share price has plunged by more than 30% over the past year.
Meanwhile, Aton fears possible value-destroying acquisitions in the US oil and gas space and has concerns over investments that “would be more highly valued by other investors” in noncore assets, such as the Gautrain.
The German firm also cites Murray & Roberts’s “poor operational performance” and a continued deterioration in the order book. But it says its offer underscores Aton’s confidence in the South African market.
The not-so-aptly-named Independent Media has rushed to defend related party Sagarmatha Technologies, days ahead of its planned listing. The Cape Times ran the headline “Sagarmatha is great for Africa” on Tuesday, while Business Report opened with “Independent’s PIC debt in check”, with a side-bar titled “Tiso Blackstar debt rescue plan bombs”.
In the article, Business Report accused Tiso Blackstar, the owner of Business Day, of using “Independent Media’s transparency in a prelisting statement as a smokescreen” to deflect attention from Blackstar’s own debts.
Independent’s coverage says scepticism around the listing is driven by the group’s competitors wanting to hold back transformation in the industry.
But what the publications failed to mention is that Sagarmatha is technically insolvent.
After analysts expressed their doubts about Sagarmatha’s investment case, Independent’s coverage drew scorn on Twitter too. Rapport editor Waldimar Pelser tweeted: “To those who thought Sagarmatha was a fraud, relax: The Cape Times assures us this is the best thing since underaged binge drinking and Independent’s debt is Ok #FakeNewsFactory.”
News24 editor Adriaan Basson said: “The ‘I’ in Independent Media should really just be changed to Iqbal [Surve].”
Commentator Victor Dlamini, who has worked at Independent’s Sunday Tribune, tweeted: “In the age of Steinhoff, it’s good to see the JSE is looking for a sequel in Sagarmatha.”
Clearly, the market and the public need more convincing before Sagarmatha becomes a successful tech giant.