Murray & Roberts slates ATON’s R15 offer

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Murray & Roberts slates ATON’s R15 offer

Published Date: 2018-03-28 | Source: Stephen Gunnion | Author: Stephen Gunnion

Murray & Roberts slates ATON’s R15 offer

At the proposed offer price, the company's independent board believes the prospects of ATON successfully delisting the company is very low

Murray & Roberts has been quick to reject a R15 per share offer from German investors to buy out minority shareholders in the construction and engineering group.

Following ATON's offer, which was made public on Monday, an independent board of directors has dismissed the proposal as "opportunistic", saying it materially undervalues the company based on its prospects.

It said the offer was "made at a time of unprecedented share price weakness as a consequence of low liquidity, declining valuations of its legacy peers in the construction sector and halting of the company's share buy-back programme in 2017.

ATON is owned by the Helmig family and owns a diversified portfolio of investments in technology, mining, automotive engineering and medical technology. It has already built a 29.9% stake in M&R after increasing its initial 4.5% investment through a number of share purchases last year. It's entered into an agreement to buy a further 3.1% and has an irrevocable undertaking from Allan Gray to support the offer - if it's made. Allan Gray holds about 10.9% of M&R on behalf of its clients.

In Monday's statement, ATON said it believed that both South Africa and M&R have strong underlying long-term fundamentals.

"With a global footprint of operations in established and emerging markets, including Africa, ATON is well placed to deliver value to all M&R stakeholders and the broader South African public," the company said. In addition to the significant value that the offer represents to M&R shareholders, ATON believes that the offer will have a positive impact on M&R in the long-term and be beneficial for a wide range of stakeholders, including M&R's management and employees. Therefore, the investment will meaningfully bolster the South African mining and engineering sector."

The German firm had M&R to recommend and help implement the offer - but plans to implement the deal by making an offer directly to M&R shareholders. It said the offer also constituted a significant source of foreign direct investment as up to R4.5 billion would flow into South Africa if the deal went through. While it said it would continue to support M&R's continued efforts to foster black economic empowerment initiatives, M&R argued that it was not clear how it proposed to manage the dilution of the company's black-ownership credentials and the potential resultant impact on materials contracts and employment.

M&R said at the proposed offer price its independent board believed the prospects of ATON successfully delisting the company was very low.

It's advising shareholders not to accept the offer.

Its shares declined 4.1% to R13.45 yesterday.



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