Ann Crotty Writer-at-large
Picture: ISTOCK
Picture: ISTOCK

Aton will have to increase its stake in Murray & Roberts to at least 46% if it wants to block M&R’s proposed transaction with Aveng. Failing that it will have to successfully challenge the right of some M&R shareholders to vote on the deal.

This means that unless an amicable solution is reached, one of the most fractious takeover battles in recent years could drag on for months, with the takeover regulation panel and the competition authorities forced to play continuing roles as each party uses the regulators to thwart the other.

The panel has given M&R’s board the all-clear to proceed with its potential merger with Aveng, M&R said on Thursday. Its decision was announced shortly after M&R shareholders voted in support of the board proceeding with a possible merger with Aveng.

On Tuesday, M&R announced that shareholders with 92.3% of the voting rights attended the controversial meeting; 52% of those in attendance supported the resolution.

The vote indicates a relative handful of M&R shareholders backed Aton in its opposition.

M&R dismissed Aton’s claim that "based on publicly available information" more than 30% of M&R shareholders are also shareholders or bondholders of Aveng and that these shareholders have a "clear conflict of interest".

M&R says the only shareholders in Aveng "who are also shareholders of consequence in M&R are Allan Gray and Dimensional Fund Advisors, which hold about 8.8% in M&R", Ed Jardim, M&R’s group investor and media executive said on Wednesday. Allan Gray is also an Aveng bondholder.

On Thursday, Aton responded: "our number of more than 30% is almost certainly correct". It referred to the Public Investment Corporation, Vanguard and Old Mutual as having significant cross-holdings.

On Thursday, M&R reminded shareholders no formal offer had yet been made to Aveng and any such offer is subject to fulfilment of certain preconditions, "including the satisfactory completion of a due diligence review by M&R on Aveng".

Given the need for competition authority approval, the process could take several months. On Thursday, Jardim confirmed that the board had not yet applied to the Competition Commission for approval.

One leading competition lawyer said the commission was likely to approve Aton’s bid for M&R long before it approves an M&R and Aveng merger. "The Aton-M&R transaction is not a particularly complicated one from a competition perspective as long as there are no threats to jobs, so it could be cleared by August, but an Aveng-M&R deal could be very complicated."

One institutional analyst said M&R’s tenacity was to be expected, as "management is trying to get a better deal for shareholders and perhaps trying to protect their jobs".