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JOHANNESBURG - Murray & Roberts (M&R)  has reached agreement with  Aton, its largest shareholder,  to discuss the merits of  M&R’s proposed acquisition  of listed financially troubled  construction and engineering  group Aveng. 

M&R yesterday, said that  it would meet the German  family-owned investment  holding firm to “procure  Aton’s support” for the potential  transaction. 

M&R did not disclose when  the meeting would take place.  It would commence against  the background of Aton  rebuffing several attempts by  M&R for engagements on the  German firm’s hostile takeover  bid for M&R.  Aton, which currently  owns about a 43.9 percent  stake in M&R, rejected the  proposed transaction with  Aveng on the same day it
was announced, claiming its  “sole intent appears to be to  frustrate Aton’s compelling  proposition to M&R shareholders”. 

M&R has proposed an allshare  transaction valued at  R1 billion to Aveng, but has  not yet made a formal offer.  In an update to shareholders  yesterday, M&R said  engagement with shareholders  of M&R and Aveng regarding  the strategic rationale and  proposed terms of the potential  transaction had to date  been positive. 

“The Murray & Roberts  board continues to believe  in the strategic and financial  merits of the potential  transaction and the potential  benefits for the shareholders  of both companies, including  Aton,” it said.  M&R said both it and Aveng  continued to pursue the fulfilment  of the pre-conditions to  M&R making a formal offer to  Aveng shareholders.  It said both companies  were currently in the process  of conducting a reciprocal  due diligence. 

The Aton shares offer was deemed to "materially undervalue Murray & Roberts". Photo: Supplied
“The board of directors of  Murray & Roberts remains  supportive of Aveng proceeding  to implement its proposed  rights offer and sale of identified  non-core assets, irrespective  of whether the potential  transaction proceeds or not,”  it said.  Aveng shareholders this  week voted overwhelmingly  in favour of resolutions to  allow the group to launch a  R500 million rights offer to  raise cash to fund its internal  liquidity requirements. 

Aveng, which plans to proceed  with the early redemption  of a R2bn bond due  for repayment in July next  year, reduced the size of the  planned rights offer after it  reached agreement in principle  with M&R about the proposed  acquisition of Aveng  by M&R. 

In terms of that proposed  transaction, M&R would provide  Aveng financing facilities  of R1.8bn.  Non-core assets identified  by Aveng for disposal include  Aveng Grinaker-LTA, Aveng  Trident Steel, its manufacturing  businesses and other  properties.  M&R was specifically  interested in Moolmans,  Aveng’s underground and  surface mining business,  and McConnell Dowell, its  engineering, construction,  and maintenance contractor. 

M&R added yesterday that  its board would continue to  pursue the potential transaction  with Aveng, including  obtaining the requisite  approvals in terms of Section  126 of the Companies Act.  This section of the act  deals with frustrating actions.  M&R plans to hold a shareholders  meeting on June 19  in terms of this section of the  Companies Act.  M&R would be unable to  proceed with proposed Aveng  transaction if it did not get  50 percent plus one share of  the votes at this meeting. 

A Takeover Special Committee  ruling released this  week said that the conduct  of M&R’s independent board  in regard to the takeover offer  by Aton was a contravention  of various sections of the  Companies Act dealing with  frustrating actions.  The committee also  ordered Aton to withdraw  its current offer to M&R  shareholders and to make a  mandatory offer to all M&R  shareholders. 

This decision was  prompted by a forward  sale agreement concluded  between Aton and asset managers  Allan Gray, which the  committee said fell foul of the  provisions of the Companies  Act.  Shares in M&R rose  3.71 percent yesterday on the  JSE to close at R18.18.