Murray & Roberts, Aton battle it out over Aveng takeover plan

● The tussle between Murray & Roberts and Aton continued this week as the Competition Tribunal was dragged into the battle, the outcome of which could determine Aveng’s fate.

M&R, South Africa’s second-biggest construction and engineering company by market capitalisation, on Thursday filed an urgent application at the Competition Tribunal to stop family-owned business Aton from exercising its 44% voting right at a crucial vote on M&R’s plans to acquire Aveng, which Aton is opposing.

Aton, which has made a bid to buy M&R, rejected a request from the M&R board to reduce its 44% voting right to 29.9%, which prompted M&R to approach the Competition Tribunal for relief.

M&R maintains that Aton should be able to vote only on the 29.9% stake it held in March, which was the percentage it held in M&R at the time it made a bid for the group. M&R said it had been assessing buying Aveng since October last year.

M&R said it had approached the Competition Tribunal to intervene because it wanted to stop Aton from using its full 44% stake to squash its bid to merge with Aveng and it wanted minority shareholders to have an opportunity to decide whether M&R should proceed with the Aveng transaction.

Aton said it would file an application to oppose M&R’s application at the Competition Tribunal. It has six working days to do so before the M&R annual general meeting at which the Aveng deal will be voted on.

On Friday M&R reiterated that the proposed merger with Aveng offered synergies between the two companies’ construction and engineering businesses. It added that M&R was focused on buying Aveng’s McConnell Dowell and Moolmans operations while the rest of Aveng’s business was noncore and would be sold off.

M&R requires the approval of shareholders and the Takeover Regulation Panel to proceed with the Aveng transaction.

Aton, however, alleges that M&R is frustrating its offer for the group.

“M&R’s application is clearly aimed at preventing Aton from voting its shares in full against the Aveng transaction. Thus, the application is another attempt by M&R to frustrate Aton’s offer,” Aton said on Friday.

Aton has increased its offer for M&R to R17 a share from the R15 a share it offered in March. Even so, M&R’s board considers the revised offer as undervaluing the company. It appointed an independent expert that has valued the business at between of R20.91 to R24.41 a share, with a likely value of R22.04 a share. In May M&R said it would offer R1-billion to buy Aveng on condition that Aveng raised at least R300-million through a share sale.

One analyst said the deal was important to Aveng as it would help them refinance their convertible bonds.

“If that deal does not go through, Aveng either needs to go back to the market to raise additional capital or it will have to try to refinance the bonds with another debt instrument. So it’s absolutely important from an Aveng perspective. If it doesn’t go through then Aveng is in a tough predicament from a liquidity perspective.”

Aton is meeting with M&R next week.

If the deal doesn’t go through then Aveng is in a tough predicament from a liquidity perspective Anonymous Investment analyst