SPECIAL SHAREHOLDERS MEETING
Aveng tie-up could be good for Aton, says M&R
Despite major shareholder Aton saying on Friday it would not support Murray & Roberts’s (M&R’s) proposed tie-up with Aveng, the JSE-listed company said it could be good for the German-based engineering, automotive and healthcare investment group and it would be working to bring it on board.
Earlier on Friday, M&R group CEO Henry Laas told Business Day that such a deal might be good for Aton. "We want to engage them very soon over the merits of a transaction and get their support," he said.
The vision shared by M&R and Aveng was to establish a large multinational engineering and construction group, creating "significant value" for shareholders of both companies.
Laas said such a transaction required shareholder approval and a green light from the Takeover Regulation Panel, which had already been approached by the group. Talks between M&R and Aveng had been ongoing since November 2017, and were interrupted by Aton’s "surprise" offer.
"It has been a very busy couple of weeks to come to this point. The process [of talks was] interrupted when the Aton offer came in — it was a curve ball you didn’t expect." Laas said M&R would hold a special shareholders meeting around mid-June to get consent "to proceed" with the Aveng merger.
"What is very important to understand is that this is not a frustrating action [against Aton’s offer]". He said section 126 of the Companies Act dealt with such issues and their remedies. But Aton had indicated in a statement later on Friday that M&R’s "sole intent appears to be to frustrate Aton’s compelling proposition" to M&R shareholders.
Earlier in 2018, M&R rejected a cash offer of R15 a share for all its ordinary shares by major shareholder Aton, which holds about 40% of the company, saying it "materially undervalues the group" at R6.7bn.
Aton said on Friday the announcement "clearly demonstrates that Murray & Roberts management is putting its interests ahead of those of shareholders and other stakeholders".
Aveng’s share price jumped 32% to a high of R1.20 on Friday after opening at R0.91. It then lost all ground gained, falling 1.1% at the close as M&R closed 4.03% higher at R16.01 on news of the proposed acquisition of its industry peer.
Agreed in principle by the boards of both companies, any transaction includes "to-be-issued share capital" of Aveng at the same time it proposes to speed up the redemption of Aveng’s outstanding R2bn in convertible bonds, maturing in 2019, at par value.
Aveng, meanwhile, intends to proceed with a rights offer announced in late April 2018, but has reduced this from R1.8bn to R500m in light of any potential merger with M&R, which M&R says it supports, irrespective of whether the transaction proceeds or not.
At the end of December 2017, Aveng had gross debt of R3.25bn, including bank debt of R1.25bn in addition to existing convertible bonds of R2bn.
On April 26, Aveng said it had used a further R350m of bank debt and expected that it would use a further R200m, subject to bank approval, increasing total bank debt to R1.8bn.
The group’s executive chairman, Eric Diack, was tied up in meetings on Friday and was unable to comment.
After Aton, the Public Investment Corporation (PIC) holds the second-largest stake in M&R. Deon Botha, the head of corporate affairs at the government pension fund manager, said on Friday the PIC had been informed of a potential transaction, including the early redemption of the Aveng convertible bonds.