Aton has slammed the application by Murray & Roberts to the Competition Tribunal, describing it as another frustrating action aimed at preventing Aton from voting all of its shares against the proposed Aveng transaction at the M&R shareholders’ meeting on July 19.
M&R contends that if Aton was allowed to vote all of its shares, it would be able to determine the outcome of the meeting. This would indicate it controlled the company without having gained the approval of the competition authorities.
On Friday the M&R share price eased back 2.1% to close at R17.26 as investors considered the latest development in the increasingly fractious bid for control of a once-powerful South African construction firm.
On Friday Aton said it would vigorously oppose the application M&R made to the Competition Tribunal and said it remains "steadfastly against the Aveng transaction as it would introduce significant risk to M&R and its stakeholders".
It said the Aveng transaction would only benefit bondholders of Aveng. Its proposed R500m rights issue at 10c a share "confirms the value destructive nature of the transaction".
Late on Friday M&R said in a Sens announcement that while it respects the right of any shareholder to express their views, "it is disappointed by the manner in which Aton, as both an offerer and the company’s material minority shareholder, has chosen to engage with the company on this matter".
M&R said it had tried to engage with Aton since it first announced the Aveng transaction on May 18 2018 but "due to Aton’s availability, the first meeting between the company and Aton regarding the potential transaction will only take place next week".
M&R said the strategic rationale for the Aveng transaction was "compelling".
It said it was aware of the challenges facing Aveng and was conducting a due diligence prior to making a formal offer. It announced the potential transaction on May 18 because of Aveng’s planned capital raising.
If M&R is successful in its efforts to restrict Aton’s voting rights from the 44% it owns to just 30%, it is possible it will have enough shareholder backing to pass the resolution at the June 19 meeting. M&R will then have to get approval from the Takeover Regulation Panel to make a formal offer to Aveng shareholders.
The Public Investment Corporation, which holds about 21% of M&R has said the Aton bid undervalues M&R. While Coronation, which holds around 21% of Aveng, has expressed support for the tie-up with M&R.
In previous transactions the Competition Tribunal has indicated a reluctance to be drawn into corporate actions and to make rulings that deprive shareholders of their rights.
Back in 2004 the tribunal ruled against Goldfields’s attempts to use competition law to stymie Harmony Gold’s bid for control of Goldfields. However, the decision on Harmony was overturned by the Competition Appeal Court, which set a precedent that appears to favour M&R in this instance.