Suddenly, Aton’s offer of R17 a share looks cheeky

MURRAY & Robersts’s (M&R) share price might be nowhere close to the R62.70 it traded at 10 years ago, but it’s reaching a point where German investment group Aton’s initial offer of R17 a share is looking just a little cheeky.

Over the past week, M&R’s share price has gained 9 percent from a close of R13.50 on June 21 to trade at R14.75 per share on Friday afternoon. This represents a substantial narrowing of the premium to shareholders from Aton’s R17 a share offer. When Aton first made its offer in March 2018, the share price was around R9.50.

The fact is, operationally M&R seems to be in a stronger place than it was when Aton first made its offer, with substantially increasing attributable income, and two recent acquisitions attesting to the strength of its international management expertise.

Aton has also framed its hostile bid from the perspective of a big German investor showing confidence in the South African economy.

But the South African construction sector has gone through some dire years, and large engineering and construction groups have folded. There are reports that many engineers and construction professionals are leaving the country in search of better prospects.

M&R is our biggest engineering and construction group. There would be nothing stopping a foreign owner in future simply closing M&R’s South African operations and concentrating on its more lucrative overseas businesses. But it makes one wonder who will build the infrastructure that this country needs so desperately?

Tiso Blackstar Holdings’s share price received a healthy boost after it announced the sale of its media, broadcasting and content businesses in South Africa, Ghana and Nigeria to Lebashe Investment Group for just more than R1 billion.

The share price rocketed more than 18 percent to R3.84 by midday on Friday, and it put the price gain over a week at almost 4 percent.

Investors appear to favour Tiso now that it will have the funds to repay virtually all its debt and shed its media interests that were struggling and in the process of cutting jobs and being restructured, due to falling circulation and advertising revenue.

But Lebashe will have its hands full getting the public to pay for online content.

That essentially leaves Tiso with its packaging and forms company, the Hirt & Carter Group.

Hirt & Carter had a good six months to December 31, reporting an 11.5 percent increase in revenue to R1.1bn and a 5.5 percent rise in earnings before interest tax and depreciation and amortisation to R173.5 million.

Tiso appears better at managing packaging machines than irascible journalists.

Another share doing well last week was Argent Industrial. Its price rose 4 percent to R5.20. The company, which is mainly involved in steel locally and internationally, on Thursday reported a 25 percent rise in attributable earnings to R86.4m.

It is expanding overseas, and further local divestments may be in the offing as it has been buying its own shares recently.

The Anglo American Platinum (Amplats) share price increased only 1.6 percent to R826.44 on Friday compared with the previous Friday’s close, but consider that over a month the share price has risen 12.7 percent.

On Tuesday, after it forecast an 80 percent increase in earnings for the six months to June 30 due to rising platinum group metal prices, the share price increased by 5.5 percent in a day.

Platinum group metals will likely continue to benefit from tightening vehicle emission standards globally, and not just in China and India, for some time to come.

Calgro M3 Holdings’s share price fell 7.79 percent on Friday to R5.33, but it was still more than 7 percent up over a week.

The price-earnings ratio is well into negative territory, no doubt because the local property investment group swung into an operating loss in the year to February.

This is one of those shares that will certainly benefit from any improvement in the economy.