Murray & Roberts soars on takeout bid

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Murray & Roberts soars on takeout bid

Published Date: 2018-03-27 | Source: Stephen Gunnion | Author: Stephen Gunnion

Murray & Roberts soars on takeout bid

If successful, the deal will lead to foreign direct investment into South Africa of up to R4.5 billion

Murray & Roberts' shares soared yesterday after German family-owned firm ATON said it planned to make an offer to buy the shares it doesn't already own in the construction and engineering group. It is offering R15 per share in cash, a 56% premium to its closing price last Thursday and 42% above the 30-day volume-weighted average price of the company's shares. This values Murray & Roberts (M&R) at R6.7 billion.

ATON is owned by the Helmig family and owns a diversified portfolio of investments in technology, mining, automotive engineering and medical technology. It owns 100% of Canada-based Redpath group, a global underground mining service provider and contractor. That fits well with M&R's underground mining operations in Africa, Australasia and the America's, which have outperformed its other businesses due to improving commodity prices and the subsequent increase in capital spending by mining companies.

In a 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."

ATON 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.

Although ATON plans to implement the deal by making an offer directly to M&R shareholders, the German firm has asked for the cooperation of its independent board to recommend and help implement the offer. M&R says the board will review the proposed terms.

ATON says the offer also constitutes a significant source of foreign direct investment as up to R4.5 billion will flow into South Africa. It said it would continue to support M&R's continued efforts to foster black economic empowerment initiatives.

M&R recently increased its stake in Gautrain operator, the Bombela Concession Company, to 50%.

Its shares closed 46% higher at R14.03.

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