After Munich-based Aton proposed a bid to by out all of Murray & Roberts’ (M&R) shareholders, shares in one of the largest engineering firms in the country jumped by 47% in early afternoon trade on Monday.
According to Fin24, Aton, who already owns 29,9% of the group’s share capital, proposed to “first buy 13,7 million additional shares”:
If completed, this would raise Aton’s holdings in Murray & Roberts to approximately 33.1%.
The German firm intends to make the firm offer at R15 a share to all the group’s shareholders, Murray & Roberts said in a stock exchange announcement on Monday.
And that’s R15 a share in cash, which is 50% above the JSE-listed group’s closing share price on Friday, which was sitting at R9,64.
No doubt, the news pushed up the share price, which was trading at R14,30 at 12:30PM on Monday.
However, an independent board of M&R is not too happy with the situation. Established by M&R directors to investigate the offer, the board has now recommended that shareholders should not accept the offer, reports Business Insider.
Running with the headline “It’s all-out war as Murray & Roberts fights back against a German hostile takeover”, here’s some of that story:
In a statement, the board said it found that the offer is opportunistic and “made at a time of unprecedented share price weakness”.
It also said that the offer price of “materially undervalues the company based on its prospects”.
In addition, the board doesn’t think Aton will succeed in delisting Murray & Roberts from the JSE.
“Scenarios where Aton accretes its shareholding but does not delist Murray & Roberts presents risks to Murray & Roberts’ shareholders and Aton, including conflicts of interest, strategic misalignment and reduced strategic flexibility and potentially casts the company adrift into a protracted period of uncertainty as Aton gradually increases its shareholding and attempts occasionally to delist the company.”
In addition, the board said it is not clear how Aton proposes to manage “the dilution of Murray & Roberts’ B-BBEE ownership credentials” and the potential resultant impact on contracts.
But get this: Allan Gray has already agreed to sell its 11% share in the company, and the market clearly thinks the rest of the shareholders are likely to follow suit.
M&R’s share price currently sits at R13,54:
As it stands, Aton is owned by Lutz Helmig [below], his wife and two daughters. Helmig is a medical doctor who started one of Europe’s largest private medical groups, Helios Hospitals, and has an estimate personal wealth of R31 billion.
If his offer does succeed, Helmig will also own half of of the Bombela Concession Company, which operates the Gautrain rail service:
Murray & Roberts recently announced that it was awarded new underground mining projects in North America and Asia to the value of R3.8 billion.
Delivering engineering and construction services to underground mining was the largest contributor to the group’s earnings in the six months to the end ofDecember 2018. Its revenue for the six months to end-December increased by 10% to R11.5 billion.
Upon the completion of the offer, Aton told Business LIVE that M&R’s management and employees would “become part of the ‘service-oriented’ investment portfolio of Aton in Africa, the Americas, Asia and Europe”.
And that, my friends, is how you create a multinational conglomerate.
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