M&R suitor makes surprise purchase of 25.42% of Aveng

GERMAN family-owned investment holding firm Aton has acquired at 25.42 percent shareholding in listed construction and engineering group Aveng in what appears to be an attempt to thwart the potential acquisition of Aveng by Murray & Roberts (M&R).

Aton, which also has an about 44 percent shareholding in M&R and has made a hostile takeover bid for M&R, has publicly stated its opposition to M&R’s potential acquisition of Aveng. It previously claimed the transaction’s “sole intent appears to be to frustrate Aton’s compelling proposition to M&R shareholders”.

Aveng reported that it was notified last Thursday that Aton and its wholly-owned subsidiary Aton Austria Holdings had acquired the shareholding in the group. Aton has not provided any reason for its acquisition of the shareholding in Aveng.

M&R said on Friday its board of directors would assess this development and provide further guidance to its shareholders in relation to a potential combination of M&R and Aveng in due course. The acquisition of the shareholding in Aveng by Aton means it would be able to prevent the potential R1 billion all-share acquisition of the group by M&R.

Any offer made by M&R would require the approval of 75 percent of Aveng’s shareholders. The failure of the transaction was likely to place Aveng in a precarious financial position.

Redemption

Aveng announced in April this year that it planned to proceed with the early redemption of a R2bn bond due for repayment in July next year.

It reduced the size of the planned rights offer to up to R500 million, which was to be used for its internal capital requirements, after it reached agreement in principle with M&R about its proposed acquisition. In terms of the proposed transaction, M&R would provide Aveng financing facilities of R1.8bn.

Aveng reported last week that it had raised R493.2m through the rights offer, which represented a 98.6 percent uptake of the rights offer by shareholders.

M&R has not yet made any formal offer for Aveng.

M&R last month scored a mini victory in its bid to potentially acquire Aveng by securing shareholder approval to further investigate this transaction. At a meeting of M&R shareholders to consider a resolution in terms of section 126 of the Companies Act, 52.06 percent of M&R shareholders voted in favour of the resolution.

This meant that other than the 44.05 percent of M&R votable shares held by Aton, 99.63 percent of M&R’s shareholders voted in favour of the resolution.

Henry Laas, chief executive of M&R, said at the meeting that they believed M&R would be able to put the proposed Aveng transaction to shareholders next month. M&R said last week its independent board had recommended its shareholders should not accept the increased mandatory cash offer of R17 a share for the group from Aton. It said the increased offer price a share remained below the independent board’s view of a fair price range of between R20 to R22 a share.