M&R’s R1bn all-share acquisition of the Aveng group runs into new snag

LISTED engineering and construction group Murray & Roberts’ (M&R) proposed R1 billion all-share acquisition of financially troubled listed construction group Aveng has hit a new snag.

The takeover special committee (TSC) this week overturned a takeover regulation panel (TRP) decision in June allowing M&R to continue developing the potential transaction with Aveng.

This followed an appeal lodged by German familyowned investment holding firm Aton, which has made a hostile takeover bid for M&R.

Aton, which owns a 43.9 percent stake in M&R, has rejected the proposed transaction with Aveng, claiming its “sole intent appears to be to frustrate Aton’s compelling proposition to M&R shareholders”.

Aton in July acquired a 25.42 percent stake in Aveng in what appeared to be an attempt to thwart the potential acquisition of Aveng by M&R.

Any offer made by M&R for Aveng would require the approval of 75 percent of Aveng’s shareholders.

The TSC has prohibited M&R from continuing to develop the potential Aveng transaction while Aton’s offer for M&R remained in place.

The TSC took this decision despite a general meeting of M&R shareholders in June voting in favour of the resolution

required to allow M&R’s board of directors to continue developing the potential Aveng transaction.

At the meeting, 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.

Aton argued that M&R’s potential transaction with Aveng contravened a section of the Companies Act in that it was “designed” to impede, frustrate or defeat Aton’s mandatory offer.

M&R said it was clear that in exercising its discretion under section Section 126(1) of the Companies Act, the TRP must have regard primarily to the views of shareholders canvassed in a general meeting.

When the TRP exercised its discretion, it needed to give effect to this objective and it did so by having full regard to the resolution of shareholders in a general meeting, it said.

However, the TSC said in its ruling that the role of the TRP could not be as limited as suggested by M&R.

In exercising its discretion, the TRP must take a broader approach, which meant the interests of all stakeholders and not only the shareholders, must be given appropriate weight and proper consideration, it said.

M&R said yesterday that its board was in the process of reviewing the TSC ruling together with its legal advisers, and that it was consulting with Aveng.

It would make a further announcement regarding the proposed transaction in due course.

Shares in M&R closed 1.28 percent lower on the JSE yesterday at R17.70.