Murray & Roberts takes issue with Aton over ‘conflict of interest’ allegation

By Roy Cokayne Time of article published Jun 21, 2018

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JOHANNESBURG - Listed engineering and construction group Murray & Roberts (M&R) has refuted claims by German family-owned investment holding firm Aton that Aveng bondholders had helped vote through a resolution allowing it to pursue the potential acquisition of the construction rival.

Aton, M&R largest shareholder with 44.05percent of its votable shares, has made a hostile bid to acquire all the shares it does not already own. It said it would vote against the resolution that was passed at the M&R general meeting of shareholders on Tuesday.

It has claimed that the potential acquisition of Aveng was an attempt to frustrate its planned takeover of M&R.

After the results of the vote were announced, Aton said it believed the outcome was heavily influenced by “a major conflict of interest by a large shareholder base in M&R”.

“Those shareholders, who are at the same time Aveng bond and shareholders, are seeking to protect their interest in Aveng,” Aton said.

Ed Jardim, the group investor and media executive at M&R, said Aton’s claim was “misleading”.

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Jardim said the only shareholders in Aveng who were also shareholders of consequence in M&R were Allan Gray and Dimensional Fund Advisors, which held about 8.8percent of M&R.

He added that shareholders constituting 91.8percent of the total shares in issue cast their vote on Tuesday.

“Therefore, leaving out Allan Gray and Dimensional, 81.5percent of shareholders other than Aton still cast their vote.

"The only bondholder in Aveng who is a shareholder of consequence in M&R is Allan Gray, which holds an approximate 4.1percent shareholding in M&R.

“It is not clear, based on these facts, what information Aton is basing its statement on,” he said.

In favour

The resolution in terms of section 126 of the Companies Act was passed by 52.06percent of M&R’s shareholders. This meant that, other than the shares held by Aton, 99.63percent of M&R shareholders voted in favour of the resolution.

Section 126 of the Companies Act deals with the prohibition of frustrating action in the event that a company was subject to an offer.

The passing of the resolution gave M&R’s board permission to further explore the potential of the Aveng transaction.

Ralph Havenstein, the lead independent director at M&R and chairperson of the general meeting, said prior to the vote that if the resolution was approved by a simple majority of M&R shareholders, M&R’s board, subject to regulatory approvals, including the approval of the Takeover Regulation Panel and the outcome of the due diligence, would move to finalise the terms of the potential offer with the board of directors of Aveng and present a formal offer to Aveng shareholders.

“The Aveng transaction will only thereafter be presented to M&R and Aveng shareholders for approval at a later date if a formal offer is made,” Havenstein said.

Henry Laas, the chief executive of M&R, believed that M&R would be able to put the proposed Aveng transaction to shareholders in August, which meant that an offer would be made in the course of next month.

Aton said it still believed the proposed transaction with Aveng was a U-turn in M&R’s stated strategy, highly value-destructive, would negatively impact M&R financial performance and situation, and had no benefits for shareholders of M&R.

M&R rose 0.85percent on the JSE yesterday to close at R17.89.


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