German holding company Aton in takeover bid for Murray & Roberts

SOUTH AFRICA – German family-owned holding company Aton, which has made an offer to buy Murray & Roberts (M&R), said that the deal has obtained merger approvals in Zambia and Namibia.

According to a report by Business Report, the listed engineering and mining contractor is yet to obtain all the competition authority approvals in South Africa and Canada before the end of March.

Aton has offered R17 (US$1.19) a share, less than the R20 (US$1.4) to R22(US$1.53) range the M&R board has put out as fair value for the business and has given an initial long-stop date of March 31 for declaring the offer unconditional.

Speaking after the release of M&R’s results for the six months to end December, chief executive officer Henry Laas said:

“I cannot say that this is an indication that the deal is closer to finalisation because approvals in SA and Canada are still outstanding.”

Aton, which currently owns 44% of M&R’s shares, said that the proposed transaction would be fraught with complications, because the Public Investment Corporation (PIC) held 22% of M&R.

Additionally, M&R, through various trusts, holds a further about 10% of the group’s shares.

If Aton obtained the regulatory approvals before the end of March, M&R shareholders would have 10 days to consider the offer, the company said.

Laas has however, expressed optimism that the deal will go through saying that the company’s shareholders could accept the R17 offer.

These would be shareholders who have considered the implications of a bigger Aton stake on the tradability and liquidity of the M&R shares, he said.

“The free float will be small. The Public Investment Corporation is already a major shareholder,” Laas added.  

Commenting on the company’s first-half performance, he said M&R’s oil and gas and power and water businesses faced difficult market conditions, with low levels of client investments and new projects experiencing delays.

Laas said the company expected a reduction in work after the completion of the power and water business’s scope of work in Eskom’s Medupi power station. Work on the Kusile power station is expected to continue into the 2020 financial year, M&R said.

“For several years [power and water] earnings were underpinned by the contribution from these two projects,” the company said.

The two businesses offset strong performance from M&R’s underground mining business, which benefitted from an upswing in commodity prices.

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