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JOHANNESBURG - The Public Investment Corporation (PIC) has indicated that it would join Old Mutual in rejecting the hostile takeover bid by German-based private investment holding firm Aton for Murray & Roberts (M&R).

The PIC, the second-largest shareholder in the JSE-listed construction and engineering group, with a shareholding of 20.157percent, described Aton’s R15 a share offer for M&R as undervalued.

PIC head of corporate affairs Deon Botha said the corporation did not support the current offer by Aton and agreed with the board of M&R that the offer “materially undervalues this successful engineering, construction and mining company, based on its prospects”.


“Furthermore, the PIC is opposed to the proposed delisting of Murray & Roberts from the Johannesburg Stock Exchange as this will diminish the investable universe on the JSE,” he said.

Old Mutual is the fifth largest shareholder in M&R, with a shareholding of about 5percent.

Yesterday M&R reported that Aton, the group’s largest shareholder, had increased its shareholding in the group to 39.8percent.

Aton’s aim is to obtain a minimum of 50percent plus one share majority shareholding in M&R.

M&R added that clients of asset manager Allan Gray had disposed of their shareholding in the group, resulting in the total shareholding in M&R held by Allan Gray clients being reduced to 4.3280percent.

Duncan Artus, a portfolio manager at Allan Gray, yesterday confirmed that it had sold 60percent of its clients’ holding in M&R.

“Allan Gray is free to trade in the remaining 4.4percent stake, just like any other M&R shareholder, which may or may not include tendering the shares to Aton in terms of their conditional offer,” he said.

Thomas Eichelmann, the chief executive of Aton, said last week that the fact that it had been able to secure agreements with two top 10 shareholders for its cash offer of R15 a share underpinned its contention that its offer represented a significant value lock opportunity for shareholders.


“At the same time, we believe that Aton’s proposition and proven track record in the mining industry will be beneficial not only to the shareholders of M&R, but to other stakeholders. Our interest in Murray & Roberts is of a long-term nature,” he said.

Marc ter Mors, the global head equity research at SBG Securities, said its published target price for M&R was R19.80, but that did not include a control premium, which would increase it to “closer to the mid-twenties” as a reasonable take-out value.

However, Ter Mors said M&R was a cyclical company, because it was exposed to resources sectors globally and its value therefore depended on the view of investors or the markets on the capital expenditure cycle for resources investments, both in terms of hard commodities but also the oil and gas sector.

M&R shares rose 1.39 percent on the JSE yesterday to close at R15.28.