Murray & Roberts in last-minute AGM changes
The engineering firm withdrew the resolution for the re-election of directors amid battle for control by Aton
In a dramatic last-minute development, engineering group Murray & Roberts (M&R) was forced to withdraw resolutions relating to the re-election of four board directors shortly before Thursday’s annual general meeting (AGM). This was to avoid their re-election being blocked by German investment firm Aton, which holds a 44% stake in M&R.
The withdrawal of the four resolutions is the latest skirmish in a drawn-out, hostile battle for control of M&R, which was once one of the country’s most powerful construction firms. It follows this week’s ruling by the Competition Appeal Court allowing Aton to vote most of its M&R shares.
The privately owned German company, which had bought an initial stake in M&R in 2015, made an offer for control in April 2018, by which time it had a stake of 29.99%. By early June, after offering R17 a share, Aton had increased its holding to 44%. The independent board of M&R has consistently urged shareholders to reject the offer and says a “fair-value price range” for control of the company is between R20 and R22 a share.
On Thursday, M&R said it had withdrawn the four resolutions needed to re-elect Ralph Havenstein, Ntombi Langa-Royds, Keith Spence and Henry Laas because the company was still subject to a mandatory offer by Aton.
The regulations controlling takeovers prohibit directors from resigning from a board from the date an offer is made until it is declared unconditional, lapses or is withdrawn. The regulations only prohibit directors from resigning. They make no reference to a director that is due to retire by rotation.
The agenda for the AGM was sent to shareholders on September 28. Ed Jardim, M&R’s group investor and media executive, said on Thursday the board “obtained a legal opinion from our attorneys and only thereafter engaged with the JSE as to the plan to withdraw these affected resolutions at the AGM”.
Three weeks before the notice of the AGM was sent to shareholders, M&R appealed to the Competition Appeal Court to restrict Aton’s voting at the AGM to 29.99%.
M&R argued that if Aton did vote all its shares, it would be able to exercise control over the meeting and therefore over M&R. This could contravene the competition laws as Aton has not yet secured regulatory approval for the deal.
Aton dismissed this argument and said recent attendance at M&R shareholder meetings showed that 44% would not be sufficient to sway the outcome of the AGM. It gave the court an undertaking that it would restrict its voting to 50% less one of the votes at the AGM.
Shareholders representing 87.64% of the shares participated at the meeting. The results indicate Aton did not vote against any resolutions but it did abstain from voting to appoint Diane Radley, Emma Mashilwane and Spence as members of the group audit and sustainability committee.