Listed engineering and construction group Murray & Roberts’ (M&R) has withdrawn its proposed R1billion all-share acquisition of financially troubled listed construction group Aveng.
The decision announced on the Stock Exchange News Service (Sens) on Wednesday follows German family-owned investment holding firm Aton, which has made a hostile takeover bid for M&R, in July acquiring a 25.42% stake in Aveng and the ruling by the Takeover Special Committee (TSC) this month overturning on appeal by Aton the approval previously given by the Takeover Regulation Panel (TRP) in terms of section 126 of the Companies Act allowing M&R to continue to develop the potential transaction in parallel with Aton’s mandatory offer for M&R.
The TSC decision prohibited M&R from continuing to develop the potential Aveng transaction while Aton's offer for M&R remained in place.
It took this decision despite a general meeting of M&R shareholders in June voting in favour of the resolution required to allow M&R’s board of directors to continue developing the potential Aveng transaction.
Other than the 44.05% of M&R votable shares held by Aton, 99.63% of M&R’s shareholders voted in favour of the resolution.
Aton argued that M&R’s potential transaction with Aveng contravened a section of the Companies Act in that it was “designed” to impede, frustrate or defeat Aton’s mandatory offer.
The acquisition by Aton of the shareholding in Aveng appeared to be an aimed at thwarting M&R's potential acquisition of Aveng.
Any offer made by M&R for Aveng would require the approval of 75% of Aveng’s shareholders.
M&R said in the statement published on Sens today that having considered these developments and its options, its board of directors believed the prospects of successfully implementing the potential transaction were limited.
“Accordingly, the board has resolved to withdraw its proposal regarding the potential combination. This decision has been formally communicated to Aveng,” it said.
Aveng said it still believed the implementation of the early bond redemption as soon as practically possible was in the best interest of all stakeholders.
“Given the recent developments in relation to the M&R transaction… the company intends to continue with its capital markets transaction and specifically the early bond redemption.
“Deleveraging the company to reduce its debt burden and to improve liquidity is critical to unlock value for Aveng shareholders. Further detail in relation to the early bond redemption is expected to be announced in due course,” it said.