South African engineering and construction company Murray & Roberts (M&R) has rejected a buyout offer from Germany’s ATON GmbH, labelling the approximately US$600 million offer ‘opportunistic’.
ATON is already a significant shareholder in M&R, owning a third of the business, and offered to buy the rest of M&R’s shares from shareholders at a cash offer price of US$1.29 (15 Rand) per share.
Despite ATON coming in at a 56% premium to its closing price last Thursday, M&R’s independent board said the low offer price, in conjunction with the risks presented in execution, make the offer ‘particularly unattractive’ for its shareholders.
“The offer is opportunistic and made at a time of unprecedented share price weakness as a consequence of low liquidity, declining valuations of its legacy peers in the construction sector and halting of the Company’s share buy-back programme in 2017,” said the independent board.
M&R’s board said it would recommend that its shareholders reject the offer, once it is formally tabled to them.
South Africa’s construction sector has tailed off since the 2010 FIFA World Cup, with few large-scale projects being awarded while fiscal strains threaten those that have been approved.