JOHANNESBURG - Murray & Roberts (M&R) rejected on Tuesday German's ATON GmbH's buyout offer that values the South African engineering and construction company at nearly $600 million, saying it undervalues it and was "opportunistic".
ATON, the investment vehicle of German investor Lutz Helmig, which already owns a third of M&R, offered to buy the rest of M&R's shares from shareholders at a cash offer price of 15 rand ($1.29) per share - a 56 percent premium to M&R closing price last Thursday.
But M&R's independent board said the low offer price, in conjunction with the risks presented in execution, make the offer "particularly unattractive" for its shareholders.
"The Offer is opportunistic and made at a time of unprecedented share price weakness as a consequence of low liquidity, declining valuations of its legacy peers in the construction sector and halting of the Company's share buy-back programme in 2017," M&R's independent board said in a statement.
M&R's board said it would recommend that its shareholders reject the offer, once it is formally made to them.
ATON plans to post an offer circular to M&R's shareholders on April 5, saying it has the backing of M&R's third largest shareholder, Allan Gray, whose stake is around 11 percent.
Shares in M&R fell more than 6 percent after the company released its statement before trimming losses to trade 5.42 percent weaker to 13.27 rand at 1238 GMT.
South Africa's construction industry has slowed sharply since the 2010 FIFA World Cup, with few major infrastructure projects awarded and those that have been approved risk being curtailed by fiscal strains.