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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.

- BUSINESS REPORT