Aton scrambles to avert M&R deal

• Competition Tribunal to decide how much of shareholder’s 44% stake can be used in vote, while Murray & Roberts has applied for restriction of 30%

The critical Murray & Roberts (M&R) shareholders’ meeting to vote on a possible tie-up with Aveng, planned for next Tuesday, will go ahead irrespective of the outcome of the Competition Tribunal hearing on Friday, said Ed Jardim, group investor and media executive at M&R.

The critical Murray & Roberts (M&R) shareholders’ meeting to vote on a possible tie-up with Aveng, planned for next Tuesday, will go ahead irrespective of the outcome of the Competition Tribunal hearing on Friday, said Ed Jardim, group investor and media executive at M&R.

The tribunal is due to consider if Aton, which opposes the Aveng deal, can vote all of its 44% stake in M&R. The M&R board has applied to the tribunal to restrict Aton’s vote at the meeting to 30%.

On Wednesday morning, the Aveng share price plummeted 50% to a low of 13c.

Small-cap analyst Anthony Clark of Vunani Securities said the construction sector shares had lost so much value they were no longer being covered by analysts. At 13c, Aveng’s market capitalisation is just R54m. Five years ago it was R12.5bn and its all-time high was R40bn.

In its application to the tribunal, M&R said its proposed tie-up with Aveng was timesensitive “due to the worsening financial position of Aveng”.

Aton countered that the urgency was self-created and that M&R was forcing Aton and the tribunal “into an urgent hearing for reasons entirely of its own making”.

In an unprecedented move, aimed at securing the tribunal’s backing, Aton on Tuesday gave an undertaking that it would restrict its voting to 50% at the meeting on June 19.

In response to M&R’s application, Aton told the tribunal it had “no intention of acquiring any control of M&R in contravention of the Competition Act.” To remove any doubts, it said if its voting rights represented more than 50% it would restrict its voting to 50%.

Although M&R is adamant the meeting will go ahead one senior competition lawyer, who spoke on condition of anonymity, said if Aton was unhappy with the tribunal ruling, it could approach the high court to have the meeting interdicted.

Alternatively, if the tribunal rules in Aton’s favour and allows it to vote 44% of its shares, M&R could postpone the meeting and seek an urgent appeal from the Competition Appeal Court.

Jardim dismissed suggestions that the tribunal’s decision may prompt an appeal that would force the postponement of the meeting.

“M&R is optimistic that it will be successful in the application before the Competition Tribunal, based on the Harmony-Goldfields precedent. However, irrespective of the decision of the Competition Tribunal, the noting of an appeal would not suspend the order and there is in all probability no time for the appeal to be heard,” said Jardim.

If shareholders with at least 50%-plus-one shares do not support M&R’s proposed tie-up it will not be able to secure the necessary approval from the Takeover Regulation Panel to make a formal offer to Aveng.

Jardim said if Aton can control the voting at next week’s shareholder meeting it will be able to materially influence a crucial strategy by preventing M&R from effecting the Aveng deal. “Exercising material influence is a form of control under the Competition Act.”