German-owned Aton believes Murray & Roberts (M&R) is putting its interests ahead of that of shareholders and other stakeholders with its proposed combination with Aveng.

The sole intent of M&R’s announcement on Friday that it plans to merge with Aveng, Aton states, is to frustrate Aton’s proposition to M&R shareholders and reflects an “underdeveloped and rushed outline of a potential transaction with a speculative rationale”.

Aton has not had any engagement with either M&R or Aveng on this transaction, the company says.

However, Aton remains of the view that the Aveng transaction directly conflicts with M&R’s stated strategy.

M&R’s strategy, Aton notes, has been to exit the infrastructure and building sector and to exit manufacturing.

The potential Aveng transaction is in direct conflict with that strategy as it would see M&R acquire infrastructure and building businesses, such as Grinaker-LTA, McConnell Dowell, Aveng Manufacturing and Aveng Trident Steel.

The Aveng transaction would further impose significant and unpredictable risk to M&R, Aton says, including a significantly heightened debt burden, assumption of businesses that incurred R6.7-billion of losses in the 2017 financial year, as well as the restructuring of significant parts of Aveng’s activities, which Aveng was unable to do.

This, Aton notes, would distract M&R from focussing on sound growth opportunities.

In addition, the Aveng transaction remains highly conditional, Aton says, including the finalisation of offer terms, due diligence by both Aveng and M&R, as well as financing by M&R and the completion of a rights offer by Aveng.

Approval by shareholders and the Takeover Regulation Panel of the action proposed by M&R is also still required.

The terms of the Aveng transaction are disadvantageous for M&R shareholders owing to a high premium paid to Aveng shareholders, substantial dilution of M&R shareholders, the significantly heightened debt burden and integration and restructuring risks which are likely to hinder M&R’s growth, Aton states.

Additionally, it adds that M&R is unable or is unwilling to disclose the possible impact of the Aveng transaction.

“Therefore, there is no basis for the proposed general meeting in relation to the potential transaction at this stage, neither will the proposed transaction be supported by Aton”.