Germany’s ATM Holding has acquired 25.5% of Murray & Roberts (M&R) in a move that makes it the majority shareholder and fuels speculation of a takeover bid for the construction and engineering group.

This emerged on the same day that Murray & Roberts reported a more than 70% fall in its interim diluted continuing headline earnings per share for the six months to December, to 27c from 93c in the same period in the previous year.

ATM is a wholly owned subsidiary of ATON, a private German investment holding company that has a diverse portfolio of investments in the mining, engineering, aviation and health technology sectors. ATON bought a 4.49% shareholding in Murray & Roberts between June and September 2015.

Murray & Roberts said it would engage with ATON regarding its intentions.

"We don’t know what their intentions are at this stage — all we know is that they own 25% of the company," Murray & Roberts head of investment Ed Jardim told Reuters.

Reuters reports that ATON held discussions between September 2015 and April 2016 with Murray & Roberts regarding a potential merger of its mining contracting subsidiary, JS Redpath Holding, with Murray & Roberts’ underground mining business, but an agreement could not be reached on the deal’s structure and value.

High Trading Volumes 

Murray & Roberts saw unusually high trading volumes in its shares last week, which had led to media speculation of a hostile takeover of the group.

The share price rose 34% on the JSE between last Thursday and Friday. Last week fund manager Coronation sold all of its shares in the group. Subsequently, Allan Gray and Sanlam Investment Management sold down their holdings to 15.35% and 4.87%, respectively.

 Market data showed about 96-million Murray & Roberts shares traded on Thursday, equal to about 22% of the company’s total issued ordinary share capital. The share price jumped from about R11 in morning trade, reaching a high of about R16 on Friday morning.

Murray & Roberts saw revenue from continuing operations of R10.7bn, well down on R13bn previously.

The group made an attributable loss of R60m from a R376m profit in the prior corresponding period. The order book for continuing operations of R24.5bn had plummeted from R35.2bn in December 2015.

"Murray & Roberts is largely exposed to the cyclical global natural resources sector which has still not recovered from a period of prolonged weakness. This is reflected in the financial results recorded for the period under review," CE Henry Laas said on Wednesday.

But he said that the natural resources market sectors were cyclical and the group was well positioned for the up-cycle.

The group said that compared with the same period previously the interim results were negatively affected by a fall in earnings from the oil and
gas platform of R172m; cost increases to close out projects and the business in the Middle East of R130m; negative forex movements of R244m; and the net present value charge of its voluntary settlement with the government of R170m.

Disappointing Results

"Murray & Roberts reported a disappointing set of results, below market expectations," Mish-al Emeran, an equity analyst at Electus Fund Managers, said on Wednesday.

"Notwithstanding the charges related to the [voluntary settlement] with SA’s government, the key divisions oil and gas and underground mining saw operating profit declining by 60% and 10%, respectively, highlighting the difficult trading conditions and challenges facing the business, which management expect to continue into the short-medium term."

With Reuters

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