Aton buys more M&R shares but nothing changes
Acquires a further 6 600 shares at R15 each
GERMAN family-owned investment holding firm Aton, which has made a hostile takeover bid for Murray & Roberts (M&R), has acquired a further 6 600 shares in the listed engineering and construction group but its total shareholding has remained unchanged.
Aton acquired the shares at R15 each on Friday, saying following settlement of the acquisition tomorrow, it would own 39.6 percent of the entire M&R issued share capital which translates to about 39.8 percent of the voting rights.
This is the same voting rights percentage Aton owned on May 11 when it confirmed “good progress” following the opening of its offer to acquire the majority of M&R.
Aton was required in terms of Section 98 of the Companies Regulations to disclose any shares acquired in the open market during the offer period.
Aton’s stated intention was to acquire 50 percent plus one M&R shares which would have lapsed if not declared unconditional in terms of acceptances received by June 14.
M&R has urged its shareholders to reject the offer and also urged shareholders who had submitted the required instruction accepting the takeover to consider retracting it.
Ed Jardim, the group investor and media executive SOUTH Africa looks likely to implement land redistribution under existing laws rather than by changing the constitution following a governing-party summit, in an approach more palatable to investors, analysts said yesterday.
President Cyril Ramaphosa, who came to power in February when former leader Jacob Zuma was ousted by his own party, has pledged to redistribute land without compensation, a move popular with poorer black voters ahead of an election next year.
The ANC said on Monday at M&R, said yesterday that the difference between the percentage shareholding Aton owned in M&R and how that translated into voting rights related to about R38 million the group bought back from the market in November last year.
Jardim said this share buyback occurred shortly before Aton voted down the resolution at M&R general meeting, allowing the company to buy back its own shares.
He said M&R did not cancel the shares it bought but moved them to treasury shares.
“As we took them out of the market and didn’t cancel them, all shareholders’ actual shareholding stayed the same, but their voting right increased by roughly 0.2 percent,” said Jardim. “Hence, Aton’s shareholding remained at 39.6 percent but their voting rights increased to 39.8 percent.”
On Friday, M&R announced the proposed acquisition of financially-troubled listed construction group Aveng in an all-share transaction valued at R1 billion, drawing a sharp reaction from Aton indicating that it would not support the transaction.
Aton said it had not had any engagement with either M&R or Aveng on the transaction, which directly conflicted with M&R’s stated strategy to exit both the infrastructure and building sector and manufacturing. it would “test the argument” that land redistribution without compensation is permitted under current laws, which would avoid the risky strategy of trying to change the constitution.
“Ramaphosa is working hard to defuse this issue. There is a carefully calculated move to work within the current legal framework,” said political analyst Daniel Silke.
It said the proposed Aveng transaction would also introduce significant risk to M&R by significantly increasing its debt burden and because it involved taking over businesses that incurred R6.7bn of losses in its 2017 financial year.
It also raised flags on the restructuring of significant parts of activities that Aveng itself had been unable to do.
Aton claimed the transaction’s “sole intent appears to be to frustrate Aton’s compelling proposition to M&R shareholders”.
However, M&R chief executive Henry Laas was emphatic that the proposed bid for Aveng had not been launched in an attempt to frustrate Aton’s bid.
Lass said M&R had received board approval to pursue the opportunity with Aveng months before it received a firm intention letter from Aton.
M&R would on June 19 be holding a shareholders meeting in terms of Section 126 of the Companies Act, which dealt with frustrating actions.
Jardim said M&R had made contact with Aton about its offer for Aveng and requested a meeting to discuss the merits of the potential transaction.
“They have replied saying that they will consider our request and come back to us,” he said.
M&R shares rose 0.50 percent on the JSE yesterday to close at R16.03.
“Changing the country’s constitution over an issue that can be dealt with under current laws would be a red flag to a bull with foreign and domestic investors.”
With parliamentary elections next year, accelerating land reform will help to nullify the threat of the Economic Freedom Fighters, a party whose push for radical wealth redistribution is attractive to disillusioned ANC supporters.
The EFF says the constitution must be changed to ensure radical redistribution of land and other parts of the economy from the white minority to the black majority.
“The ANC has become disposed to expropriate without compensation precisely because of pressure from the EFF,” said Lesiba Teffo, a political analyst and a professor at the University Africa.
“I think the majority of the people will be happy with a measured approach.
“The EFF has overplayed the race card,” he added.
Some investors are concerned that the ANC’s reforms will result in white farmers being stripped of land to the detriment of the economy, although Ramaphosa has repeatedly said any changes would not compromise food security or growth.
Experts say South Africa will not repeat the violent land seizures seen in neighbouring Zimbabwe. – Reuters of South