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JOHANNESBURG - The conduct of Murray & Roberts’ (M&R) independent board in the hostile takeover offer by German family-owned investment holding firm Aton was a contravention of various sections of the Companies Act dealing with frustrating actions, a Takeover Special Committee has ruled. 

The committee has also directed Aton to withdraw its offer to M&R shareholders and ordered Aton to make a mandatory offer to all M&R shareholders. 

This mandatory offer must be on the same or similar terms to those contained in the forward sale agreement entered into between Aton and asset management company Allan Gray in line with the mandatory provisions of the Companies Act and Takeover Regulations, it said. 

These rulings by the committee follow complaints lodged by both M&R and Aton. The committee also ordered M&R chief executive Henry Laas to refrain from making “any public statements regarding or concerning the offer”. 

It agreed with the submission by Aton that a direction of Takeover Regulations required the independent board to obtain appropriate external advice from the independent expert in the form of a fair opinion and that it “must take cognisance of the fair and reasonable opinion received in forming its own opinion on an offer consideration”. 

It believed the independent board should also take cognisance of a provision of the regulations that stated “while respecting regulatory timetables, allow sufficient time to discharge all duties and responsibilities and resist haste and pressured time deadlines”. 

The committee said the timeline between the firm intention announcement and the response was “in our view very short and the response was made hastily”. 

It said this conduct by M&R’s independent board was prohibited by sections of the Companies Act. 

M&R said yesterday that its independent board had noted the ruling by the committee, but stressed its actions and guidance since receipt of the firm intention offer letter had been in the best interests of the company and its shareholders. 

The group added that the guidance to M&R shareholders to not accept the Aton now withdrawn offer was carefully considered and took into account the opportunistic nature of Aton’s approach. 

“Ultimately, these actions have forced Aton to issue a new firm intention announcement and, in due course, the new Aton mandatory offer at an increased offer price with reduced conditionality,” it said. 

The new Aton mandatory offer was an increased cash offer price of R17 an M&R share. M&R’s independent board highlighted that the increased offer price remained below its fair value range of R20 to R22 an M&R ordinary share. Aton said the committee ruling substantively upheld its offer and improved its quality. 

It stressed that the ruling did not change the substance of its offer, with the current voluntary offer to be converted into a mandatory offer. Aton added that the converted offer “provides even higher certainty of implementation” of its offer, the terms remained substantially the same, but was enhanced by the removal of the minimum acceptance condition. 

It claimed its offer had been boosted by the risk posed by M&R’s proposed acquisition of Aveng, adding that it had received unsolicited inquiries and heightened interest by institutional shareholders in its offer following M&R’s announcement of the proposed acquisition. 

Shares in M&R declined 0.58 percent on the JSE yesterday to close at R17.15.