M&R told to hold firm on Aton deal
THE increasingly acrimonious battle between Murray & Roberts (M&R) and Aton looks set to drag on after the JSE-listed group formally rejected the latest offer from the German-based investment company.
The independent board of M&R told shareholders in midweek that it had tried to engage with Aton on the basis that its revised offer of R17 a share was too low but that “Aton was not prepared to engage”.
During a teleconference call with shareholders and analysts on Wednesday, Suresh Kana, chairman of the independent board, urged shareholders “to continue to hold the line” against the conglomerate, whose latest offer values the once-mighty M&R at just R7.6-billion.
Kana also said the independent board was seeking clarification on the ruling by the special committee of the Takeover Regulation Panel banning group chief executive Henry Laas from making any public comments on the fractious battle for control.
During the teleconference Kana told shareholders that Laas and the board had at all times acted in the best interests of the company and shareholders, in terms of their fiduciary duty.
In an unprecedented move the takeover special committee ruled last week that Laas must “refrain from making any public statements regarding or concerning the offer”. It also ruled that the independent board had contravened the section of the Companies Act that prohibits target companies from taking actions that could frustrate control bids that have been launched.
In mid-May, almost two months after Aton made an offer to M&R shareholders, the JSE-listed group announced a potential tieup with Aveng.
The M&R independent board told the takeover authorities that as Aton’s initial offer was not a “bona fide” offer the proposed tieup with Aveng could not be deemed a frustrating action.
Kana said on Wednesday that the R17 a share offer from Aton was still well below the R20-R22 range it considered fair. He urged shareholders to “continue to hold the line” against what he described as an “opportunistic bid” by the conglomerate.
Kana said that having secured 43.4% of the M&R shares Aton was finding it increasingly difficult to get hold of any more shares. He described the proposed tie-up with Aveng as “highly strategic” and said it had the support of the majority of the minority shareholders.
Peregrine Capital’s David Fraser questioned the independent board’s view that the fair value for M&R was between R20 and R22, given that management was considering an estimated R1-billion rights issue at R15 a share as part of the Aveng tie-up.
Simon Denny of Deutsche Bank, which is advising the independent board, said that the pricing of the rights issue had not been announced and would only be known once the Aveng deal was finalised. Preliminary communications with shareholders have indicated the share price for the rights issue will be based on M&R’s 30-day moving average. On Wednesday M&R’s share price closed 2.22% higher at R17.53. It has rarely traded above R15 during the past few years.