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

An "insider" block of 11% of Murray & Roberts (M&R) shares held by the group’s executive incentive schemes and empowerment trusts helped to secure the necessary support for the M&R board to pursue its proposed transaction with Aveng, Aton said on Tuesday evening.

"It’s reasonable to assume that these M&R shareholders have a clear conflict of interest," said Aton, adding that "together these holdings proved decisive in today’s vote".

When asked to confirm who voted the shares, Eduard Jardim, M&R’s group investor and media executive, told Business Day it did not disclose the voting of particular shareholders.

A total of 92.28% of M&R shareholders voted, with 52.6% voting to pursue the merger proposal. This suggests Aton, with 44% of the votes, was almost the only shareholder to vote against the resolution.

Aton’s response indicates the battle is far from over, but the setting is likely to move from the competition authorities to the takeover regulation panel. "The next step … will be for the panel to make an independent determination from shareholders on whether M&R can continue exploring the proposed transaction with Aveng," Aton said.

If it hopes to kill the Aveng deal, Aton will have to persuade the panel there was a conflict of interest and this compromised the outcome of the vote.

M&R CEO Henry Laas said the vote was a demonstration of shareholder democracy, and shareholders had given the board permission to explore a potential Aveng transaction.

Before the board can put a proposal to the shareholders it must get the approval of the takeover regulation panel. In May, the panel said it would consider M&R’s request for approval after the shareholder vote and after it had considered submissions from shareholders.

After the M&R meeting Aton said: "Having heard the entirely unconvincing arguments presented by M&R, Aton remains unequivocally opposed to the proposed transaction." It said the transaction would destroy shareholder value and impose unpredictable risk on M&R.

Laas said M&R was interested in Aveng’s opencast mining business, which he said would fit well with M&R’s underground mining business.

M&R was also interested in Aveng’s Australian business, which would fit with M&R’s Australian operations and leave the group well placed to take advantage of the hefty infrastructure spend the Australian government was planning.

Aton counters that the deal represents a U-turn in M&R’s stated strategy of focusing on the global natural resources market. Aton says the deal exposes the group to the high-risk general construction, steel and manufacturing sectors and it protects Aveng bondholders at the expense of M&R shareholders.

Correction: June 20 2018

An earlier version of this article reported that Aton noted that more than 30% of M&R’s shareholders were also shareholders or bondholders of Aveng. But Murray & Roberts (M&R) says that the only shareholders in Aveng who are also shareholders of consequence in M&R, are Allan Gray and Dimensional Fund Advisors, which hold approximate 8.8% in M&R. The only bondholder in Aveng which is a shareholder of consequence in M&R  is Allan Gray, which holds an approximate 4.1% shareholding in M&R. We regret the error.