Interest in ATON offer enhanced by the risk of the Aveng transaction
ATON is pleased with the positive response to its offer to acquire a controlling and strategic interest in Murray and Roberts (M&R). ATON will submit an enhanced offer providing more clarity and certainty for shareholders following the ruling by the TSC. Furthermore, the TSC ruled that M&R’s independent board has acted in contravention of the Companies Act, thus not in the best interest of M&R shareholders. Following heightened interest in the ATON offer enhanced by the risk of the Aveng transaction, ATON increased its shareholding in M&R to c.44% and increased the offer price to ZAR 17.00.
01 ATON’s strategy is geared to growth based on a sound capital structure
Transaction is not based on South African cost synergies – there is minimal overlap between M&R and ATON’s Redpath subsidiary which has less than 400 employees in South Africa
ATON can be a catalyst for growth for M&R with its proven trackrecord and experience in mining (complementary competency and technology-based expertise)
ATON’s sound capital base can facilitate many growth opportunities for M&R
02 M&R’s intended Aveng transaction imposes substantial risk on M&R
M&R’s intended Aveng transaction imposes significant risk to M&R (high debt burden; high losses, R7bn in FY17)
Terms of the Aveng transaction are disadvantageous for M&R and primarily protect Aveng’s shareholders and bondholders
Combination with Aveng would distract M&R from pursuing attractive growth opportunities
03 ATON’s offer is high quality for shareholders
ATON’s offer directly to shareholders is not hostile, but recognises that M&R’s shareholders are best suited to assess the offer
Based on the TSC ruling substantially upholding ATON’s offer, the current voluntary offer will be withdrawn and replaced with a mandatory offer
The mandatory offer provides even higher certainty of implementation of the ATON offer
º Terms remain substantially the same and are enhanced by removal of the minimum acceptance condition (which ATON had intended to waive in any event)
º Only legally required regulatory and merger control conditions remain
04 ATON’s offer reflects M&R’s value
ATON’s offer is higher than the target prices of two of the three brokers actively covering the stock
The price suggested by M&R is not realistic given M&R’s admitted challenges outside Underground Mining and the questionable profitability. According to M&R1 the “order book is under pressure”, it “is of concern in Oil & Gas, … [and] in Power & Water”, and Oil & Gas has “no single big-value, longterm project[s]”
The fair value price range assumed by the Independent Expert is currently unsubstantiated given that the underlying valuation has not been publicly disclosed, preventing shareholders from making an informed decision
05 ATON’s increased offer price is even more compelling and not “opportunistic”
Interest in Aton’s offer has further increased after the announcement of the Aveng transaction
Three of M&R’s larger shareholders have now sold shares to ATON Premium offered is even more compelling2:
º 77.3% premium to the last closing price
º 53.8% premium to the 90-day VWAP
º 35.7% premium to the threeyear VWAP, which is inflated by ATON’s original stake acquisition and by M&R’s share buyback program
Price should be viewed in reality of M&R’s share price, which closed at or below R10.00 on more than 100 occasions in the three years prior to ATON’s offer
1 M&R quotes reflect statements in its 2018 interim results transcript
2 Last closing price and VWAPs up to Thursday, 22 March 2018, being the last business day immediately prior to the date ATON notified the M&R board in writing of its firm intention to make the offer