Ann Crotty Writer-at-large

Germany-based conglomerate Aton has told the Competition Tribunal that Murray & Roberts’s (M&R’s) bid to restrict its voting rights to just 30% at the shareholders’ meeting on June 19, called to vote on a possible tie-up with Aveng, is nothing more than a frustrating action.

It said the move represented an attempt to abuse the Competition Act. Aton lodged its responding papers with the tribunal on Tuesday evening.

Aton gave the tribunal an undertaking that it would not vote more than 50% of the votes cast at the meeting if its rights constituted more than 50% of the votes present at the meeting.

Aton said M&R’s application was an attempt to frustrate the offer that was made by Aton to M&R shareholders. It told the tribunal that if the Aveng transaction was allowed to proceed, M&R shareholders would suffer "substantial prejudice".

Aton also criticised M&R for the "curtailed time periods it has imposed" on Aton and the tribunal, which has scheduled a hearing for June 15.

Aton told the tribunal that the urgency was entirely self-created. It said M&R claimed that it had been in discussions with Aveng since October 2017.

"Although M&R claims that these discussions have been ongoing for around nine months, they are not yet at an advanced stage — reciprocal due diligence exercises have only recently been started and the proposed transaction is subject to a great number of conditions precedent, all of which still need to be fulfilled," Aton said.

It said that this was evidence there was no time pressure.

Despite this, said Aton, M&R asserted that the Aveng transaction was time-sensitive "due to the worsening financial position of Aveng".

M&R has said that it sought the restriction on the grounds that it wants to prevent Aton from implementing a merger before it has secured the necessary approval from the competition authorities.

M&R contends that on the basis of previous shareholder participation at meetings Aton’s 44% stake in M&R will be sufficient to block the resolution, which needs 50% support.

However, Aton claims its 44% will not be sufficient to control the outcome of the meeting. It said that the M&R shareholder base was significantly more concentrated than previously and that shareholder attendance at the meeting on June 19 was likely to be considerably higher than usual.

Aton said the top 10 shareholders, excluding Aton, accounted for 54.16% of the voting rights. These were sophisticated independent institutional investors and shareholders closely associated with M&R.

Ahead of the offer it made to M&R shareholders at the end of March, Aton held about 33% of M&R and had irrevocably agreed to acquire an additional 6.5% from Allan Gray. By the end of May, Aton had acquired 44.06% of M&R’s voting rights.

Meanwhile it has emerged that Old Mutual has sold its about 5% stake in M&R.

At the end of March — shortly after Aton announced its R15 a share offer — Old Mutual analyst Brian Pyle said that the offer was "below what we believe is fair value".

The share price subsequently moved to a high of R19 before moving back to about R17.

On Monday an Old Mutual representative confirmed it had sold out of M&R.

"But we are still holding M&R in our tracker funds," the person said.