Formerly hostile suitor unclear about its M&R intentions

02-10-2019
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Moneyweb
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Family-owned Aton decides to retain its 44% stake after letting takeover offer lapse.

The future intentions of Aton towards JSE-listed engineering and construction group Murray & Roberts (M&R) are unclear after the German family-owned holding company allowed its hostile takeover bid for M&R to lapse.

In a statement in which it announced the lapsing of its offer, Aton said it intends to remain invested in and support M&R as a significant shareholder.

However, what Aton means by supporting M&R is unclear; it declined via its South African communications company to answer a number of questions on the issue.

This includes the rationale and intention for its decision to remain invested in M&R, whether Aton intends to request representation on M&R’s board, what sort of support Aton believes it can provide to M&R, and under what circumstances Aton would consider selling its M&R shareholding.

Ed Jardim, group investor and media executive at M&R, was also unable to comment on Aton’s future intentions.

Jardim says M&R does not know what the rationale is for Aton retaining its shareholding in the group or what it means from both a regulatory perspective and for the group that holds 44% of M&R.

M&R said on Tuesday that it will continue to engage with Aton in relation to its interest in the group as a significant shareholder, and will continue to execute on its business plan to create value for its shareholders.

Jardim confirms that Aton does not have any representation on M&R’s board and has not indicated in any of their meetings that it would be interested in a board seat.

However, Jardim says this was probably deliberate because Aton was in an ‘offer’ process and would conflict itself if it had a seat on the board.

However, Aton may want representation on the board so it can look after its investment in the group now that the offer has lapsed.

“That is why we have to engage them,” says Jardim.

“We had a very different discussion with them while we were under offer. Now that we are no longer under offer, we need to have a different discussion.”

He adds that M&R aims to set up an independent board meeting soon, and that Aton will decide the course of action from there.

Aton’s announcement on Monday that it had decided against further extending the long-stop date of its takeover bid for M&R, after twice previously extending the offer, followed it previously indicating that it would contest the Competition Commission’s recommendation to the Competition Tribunal that the transaction be prohibited.

‘Respectful disagreement’

While the tribunal’s hearing on the matter was set to begin in December, Aton said it has now decided against participating in the proceedings to contest the commission’s recommendation – despite respectfully disagreeing with it.

The firm said it remains convinced that the proposed merger does not raise any competition concerns and would result in significant public interest benefits.

Other reasons cited by Aton for deciding against further extending its long-stop offer date include the continued stance of M&R’s independent board not to cooperate or recommend Aton’s offer, and the significant risks associated with each extension of the long-stop date.