M&R bets on tribunal to foil Aton’s takeover
• Watchdog asked to limit voting stake to 29.99% • Control acquired ‘in contravention’ of act
In a move reminiscent of Harmony Gold’s controversial bid for control of Goldfields in 2004, Murray & Roberts (M&R) is attempting to use the competition authorities to thwart Aton’s bid for control.
On Thursday morning M&R asked the Competition Tribunal to interdict Aton from voting all of its shares at the crucial M&R shareholders meeting scheduled for June 19 to vote on the proposed transaction with Aveng.
M&R has argued that Aton should only be entitled to vote the 29.99% of M&R shares it held on March 22, which was when it launched its offer to M&R shareholders.
Since that date, Aton has built up a 44% holding in M&R.
In an application lodged with the tribunal on Thursday, Suresh Kana, chairman of the M&R independent board, argued that if Aton was allowed to vote its 44% stake it would be able to determine the outcome of the meeting, which essentially would mean it had effective control of M&R.
Kana said such control had been acquired in contravention of the Competition Act as Aton had not yet been granted the necessary approval by the competition authorities.
The June 19 meeting was called to give M&R shareholders an opportunity to indicate if they support the proposed tie-up with Aveng. The meeting is part of a requirement of the Takeover Regulation Panel.
The panel has said it will consider the outcome of the meeting in its consideration of M&R’s application for approval to pursue a transaction with Aveng. The panel said it would also consider representation from M&R shareholders.
Aton has claimed that M&R’s proposed transaction with Aveng is nothing more than an attempt to frustrate the Aton offer. In his application, Kana said: “It is noteworthy that Aton and its affiliates may already
control M&R by virtue of their 44% shareholding and in light of historical voting patterns [at M&R shareholder meetings].
“But in any event, even if Aton does not already control M&R, by exercising its voting rights in respect of any shares acquired after close of business on 22 March 2018 at the 19 June 2018 shareholders’ meeting, it will exercise control over M&R, in contravention of section 13A(3) of the Competition Act.”
Kana said shareholders were required to pass a resolution by a simple majority. In explaining the urgency of his approach to the competition authorities Kana said, “the proposed transaction is time-sensitive due to the worsening financial position of Aveng and accordingly requires that shareholders vote by no later than the 19 June on whether or not M&R should proceed, in order to keep the tight timelines in relation to the fulfilment of the preconditions to be achieved by each of M&R and Aveng to enable M&R to make an offer to Aveng and ultimately implement the proposed transaction in the event that it is approved by shareholders”.
Business Day was unable to confirm whether M&R has applied to the competition authorities for approval for the proposed transaction with Aveng. At the time of publication on Thursday evening, neither M&R nor Aton had been able to respond to requests for comment.
The Goldfields approach to the competition authorities back in 2004 helped to end Harmony’s audacious $8.1bn bid, which would have created the world’s biggest gold company but threatened the jobs of longserving Goldfields’ executives.
On Thursday, ahead of the release of news of the latest defensive move by M&R, the M&R share price closed 2.06% lower at R17.63. This is just 63c above the recently revised offer from Aton.
THE PROPOSED TRANSACTION IS TIME-SENSITIVE DUE TO THE WORSENING FINANCIAL POSITION OF AVENG