Murray & Roberts (M&R) announced on Thursday that it would proceed to further develop a potential tie-up with Aveng after the Takeover Regulation Panel (TRP) sanctioned the outcome of an earlier shareholder vote, which approved a resolution stating that the proposed Aveng deal was not designed to frustrate a bid by ATON to acquire M&R.

The resolution was necessary in terms of Section 126 of the Companies Act dealing with restrictions on frustrating actions, including moves to acquire assets in the face of legitimate offers.

Prior to the vote, German investment company ATON, which holds around 44% of M&R and is in the process of seeking to buy out all minority shareholders, argued persistently that the proposed Aveng transaction was nothing more than a “poison pill” designed to thwart its takeover bid.

However, the M&R independent board vociferously denied the allegation, arguing that talks with Aveng began prior to ATON’s bid for M&R and that the transaction was being proposed in order to improve the competitive position of M&R in key mining and infrastructure markets.

At a general meeting held at M&R’s head office in Bedfordview on June 19, a narrow majority of shareholders (52%) voted to approve the Section 126 resolution, notwithstanding ATON’s ongoing opposition.

Ahead of the meeting, M&R approached the Competition Tribunal in an effort to restrict ATON’s voting contribution to those shares accumulated prior to its March 23 firm-intention offer. However, while the tribunal did impose restrictions in the event of low shareholder participation, the limitations were never imposed, as votes were exercised for more than 90% of M&R shares.

Following the vote, ATON argued that the outcome had been heavily influenced by a conflict of interest among other minority shareholders, who were either shareholders or bondholders in Aveng. M&R described ATON’s statement as “misleading”, though, noting that the only overlapping shareholders of consequence were Allan Gray and Dimensional Fund Advisors, who together held about 8.8% of M&R.

“Therefore, leaving out Allan Gray and Dimensional, 81.5% of shareholders, other than ATON, still cast their vote. Secondly, the only bondholder in Aveng who is a shareholder of consequence in M&R is Allan Gray, who holds an approximate 4.1% shareholding in M&R.”

However, ATON contests these figures, arguing that the overlap could be "more than 30%". The company argues that, even using only M&R's reference to “shareholders of consequence”, omissions included the Public Investment Corporation, Vanguard and Old Mutual, with cumulative holdings in M&R of between 23% and 26%.

Having secured the TRP’s approval, M&R stressed that the proposed transaction with Aveng would proceed only once several preconditions were met, including the completion of a due diligence review by M&R on Aveng. “Only once all the preconditions have been fulfilled and a formal offer made, will the board of directors of M&R present the terms of the potential transaction to shareholders for approval,” the board said in a statement.

For its part, ATON continued to oppose M&R’s proposed tie-up with Aveng, which is said contradicted M&R’s stated strategy, while offering no benefit for M&R shareholders. ATON also argued that the tie-up would undermine M&R’s financial position and would be “highly value destructive”.