Has Aton played an Aveng ace?
BATTLE: GERMAN SUITOR OPENS NEW FRONT IN TAKEOVER
The investment group has acquired 25% of M&R’s takeover target Aveng.
Murray & Roberts’ unwelcome suitor, German investment group Aton, has seemingly opened up a new front in its battle to take over the South African engineering and resource group by acquiring more than 25% of M&R’s takeover target Aveng.
Aton, which holds about 44% in M&R, has been opposed to M&R’s plans to acquire all the shares in struggling Aveng. It failed to stop the transaction when it was outvoted by minority M&R shareholders in June.
It seems Aton might have decided to try to fight M&R’s Aveng acquisition from inside Aveng, since its shareholders will have to approve the transaction once M&R makes a firm offer.
A source close to the transaction told Moneyweb that Aveng would need 75% shareholder approval to proceed with the M&R transaction and that holding more than 25% of the shares could therefore put Aton in a strong position to block the takeover.
M&R has made it clear that it is interested in Aveng’s Australian business McConnell Dowell and its local open-cast mining business Moolmans. It declared its intention to delist Aveng should the takeover succeed.
It also supports Aveng’s plans to sell its “non-core” assets, including the struggling local construction business Grinaker-LTA, Trident Steel and its manufacturing assets.
Aton has slammed the proposed M&R/ Aveng deal as a move by the M&R board and management to frustrate Aton’s advances. It accused M&R of moving backwards strategically, by re-entering the construction industry through Aveng after it earlier purposefully left the industry when it sold its own construction business.
Aton expressed its doubts that M&R would succeed in selling Aveng’s non-core assets, since Aveng itself has been battling to find willing buyers.
M&R, however, denied that it is trying to frustrate Aton’s advances, saying its valuation of the non-core assets differs from that of Aveng and that it does not expect any problems with the sale of Aveng Grinaker-LTA and the other identified assets.
If Aton succeeds in blocking the M&R/Aveng transaction, questions would remain about Aveng’s future.
Other than its Australasia and Asia construction and engineering business, and Aveng Mining, all other segments of the group operated at a loss.
Aveng’s share price opened at a mere 9c on Friday, down more than 93% from the level of R1.10 three months ago.
After the news of the Aton acquisition on Friday, the Aveng share price jumped to 12c and eventually closed at 11c.
A week ago Aveng announced that it had managed to raise almost R500 million in a rights offer. This might have been the mechanism Aton used to obtain its 25% stake. The proceeds of the rights offer will partly be used to redeem some of Aveng’s convertible bonds early.
In terms of a timetable Aveng published earlier, M&R was expected to make a firm offer after the completion of the Aveng rights offer. This is also dependent on the results of a due diligence.
If M&R does proceed with the formal offer, it would be put to Aveng shareholders by mid-August and to M&R shareholders by the end of August.
Aton, on its part, is essentially interested in M&R’s mining business and has stated its intention to delist the South African group if it gains control.
Aton has slammed the proposed deal