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ATON GmbH - Firm intention announcement by ATON GMBH (“ATON”) to make a mandatory offer
ATON GmbH - GEN – General – Firm intention announcement by ATON GmbH or a nominated wholly-owned subsidiary to
make a mandatory offer to acquire all the issued ordinary shares of Murray & Roberts Holdings Limited not
already owned by ATON GmbH or its affiliates, at ZAR17.00 per share, payable in cash; announcement of
acquisitions of Murray & Roberts ordinary shares; ATON current shareholding in Murray & Roberts
ATON GmbH
(Incorporated in Munich, Germany)
Registration number with the commercial register at the local court of Munich HRB 193331
(“ATON”)
FIRM INTENTION ANNOUNCEMENT BY ATON GMBH (“ATON”) TO MAKE A MANDATORY OFFER TO ACQUIRE ALL
THE ISSUED ORDINARY SHARES OF MURRAY & ROBERTS HOLDINGS LIMITED (“M&R”) NOT ALREADY OWNED BY
ATON OR ITS AFFILIATES AT ZAR17.00 PER M&R ORDINARY SHARE, PAYABLE IN CASH; ANNOUNCEMENT OF
ACQUISITIONS OF M&R ORDINARY SHARES BY ATON; AND CURRENT ATON SHAREHOLDING IN M&R
1. INTRODUCTION
Shareholders of M&R (“M&R Shareholders”) are advised that on Friday 25 May 2018, the Takeover
Special Committee (“TSC”), a committee of the Takeover Regulation Panel, following a two-day
hearing on 15 and 16 May 2018, handed down the following ruling (“TSC Ruling”) in relation to ATON’s
voluntary offer:
1.1 ATON is required to:
1.1.1 withdraw its voluntary offer (“Voluntary Offer”), through its wholly-owned subsidiary ATON Austria
Holding GmbH, a company registered in Austria with registration number FN 444911 g (“ATON
AT”) to all M&R Shareholders (other than ATON or its affiliates), to acquire all or a portion of the
remaining issued ordinary shares of M&R (“M&R Shares”) not already owned by ATON or its
affiliates; and
1.1.2 replace it with a mandatory offer to M&R shareholders, in terms of Section 123 of the Companies
Act, 71 of 2008 (“Companies Act”), to acquire any remaining M&R Shares not already owned
by ATON or its affiliates, on the same or similar terms as ATON AT’s acquisition of M&R Shares
from Allan Gray Proprietary Limited* (“Allan Gray”) pursuant to the forward sale agreement
between ATON, ATON AT and Allan Gray, dated 29 March 2018 (“Forward Sale Agreement”).
The relevant terms of the Forward Sale Agreement are described at paragraph 16.2.
1.2 The conduct of the independent board of M&R (“Independent Board”), in the respects referred to
in the TSC Ruling, constituted a contravention of Section 119(1)(c) read with Section 126(1)(a) of
the Companies Act, which are aimed at preventing and restricting actions which could frustrate
or impede a bona fide offer or deprive shareholders of an opportunity to decide on the merits of
such an offer.
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1.3 Mr Henry Laas, in his capacity as CEO of M&R, is ordered to refrain from making any public
statements regarding or concerning ATON’s offer.
1.4 The TSC Ruling must be published by the Takeover Regulation Panel, in terms of Regulation 119(4)
of the Takeover Regulations prescribed by the Minister of Trade and Industry in terms of Section 120
of the Companies Act (the “Takeover Regulations”), and will be available on the Takeover
Regulation Panel’s web site: www.trpanel.co.za.
2. ANNOUNCEMENT OF WITHDRAWAL OF VOLUNTARY OFFER WITH EFFECT FROM THE OPENING OF ATON’S
MANDATORY OFFER
2.1 ATON hereby withdraws the Voluntary Offer with effect from the date and time at which the Offer,
defined at paragraph 3.1 below, opens.
2.2 M&R Shareholders who have tendered acceptances of the Voluntary Offer are advised that such
acceptances shall fall away as a result of the withdrawal of the Voluntary Offer, which will no longer
be capable of acceptance. If you are a Dematerialised Shareholder who accepted the Voluntary
Offer, there is no need to take any further action, and it is advisable to contact your CSDP or broker
should you have any questions. If you are a Certificated Shareholder who accepted the Voluntary
Offer, Documents of Title will be returned to you by registered post within five business days
following the withdrawal of the Voluntary Offer.
2.3 M&R Shareholders who have tendered acceptances of the Voluntary Offer will be able to tender
acceptances under the Offer, which will replace the Voluntary Offer. Instructions for accepting the
Offer shall be set out in the Offer document referred to in paragraph 19.
2.4 The withdrawal of the Voluntary Offer and its replacement by the Offer will have no impact on the
M&R Shares already held and/or acquired by ATON.
3. ANNOUNCEMENT OF ATON’S FIRM INTENTION TO MAKE A MANDATORY OFFER, WHICH WILL REPLACE
ATON’S VOLUNTARY OFFER
3.1 ATON hereby announces that it has the firm intention to make through ATON AT, a mandatory offer
to all M&R Shareholders other than ATON or any of its affiliates (“Offer”) to acquire all the remaining
M&R Shares not already owned by ATON or any of its affiliates (“Offer Shares”), at an offer
consideration of ZAR17.00 per Offer Share (“Offer Consideration”) on the basis set out in this
announcement.
3.2 The Offer Consideration of ZAR17.00 per Offer Share is as a result of ATON AT, on Wednesday 23
May 2018, having acquired 18,254,275 M&R Shares on market as allowable dealings for an average
consideration of ZAR16.99 per M&R Share, and a maximum consideration of ZAR17.00 per M&R
Share. As announced by ATON on SENS on Friday 25 May 2018, as a result of such acquisitions ATON
was required, in terms of Regulation 111(6) of the Takeover Regulations, to increase the offer
consideration for its Voluntary Offer to ZAR17.00 per M&R Share, being the highest consideration
for the M&R Shares acquired by ATON AT.
3.3 Accordingly, the Offer Consideration for purposes of the Offer is ZAR17.00 per Offer Share. If ATON
AT acquires any additional M&R Shares during the course of the Offer at a price higher than
ZAR17.00, then in terms of Regulation 111(6) of the Takeover Regulations, ATON will be obliged to
increase the offer consideration to not less than the highest consideration per M&R Share so
acquired, and will do so accordingly.
3.4 Further details of ATON and ATON AT are set out in paragraph 6.
4. ANNOUNCEMENTS OF FURTHER ACQUISITIONS OF M&R SHARES AND UPDATE AS TO ATON’S OWNERSHIP
INTEREST IN M&R
4.1 M&R Shareholders are advised that on Thursday 24 May 2018 ATON AT acquired an additional
117,302 M&R Shares on market, for a consideration of ZAR16.99 per M&R Share.
4.2 M&R Shareholders are further advised that on Friday 25 May 2018, ATON AT acquired an additional
385,738 shares for a consideration of ZAR17.00 per M&R Share.
4.3 Following settlement of the above acquisitions on Tuesday 29 and Wednesday 30 May 2018
respectively, ATON AT will hold 194,855,660 M&R Shares, representing an ownership interest of
approximately 43.81% of the entire issued share capital of M&R, which translates to approximately
44.06% of the voting rights of M&R (“Aggregate ATON Shareholding”). ATON’s ownership interest is
based on M&R’s total issued share capital being 444,736,118 M&R Shares, and takes into account
non-voting shares, including those repurchased by M&R pursuant to its 2017 share repurchase
programme.
5. RATIONALE FOR THE OFFER AND BENEFITS OF THE OFFER FOR M&R
5.1 ATON is of the view that the implementation of the Offer will be beneficial to M&R and its
stakeholders. The Offer consideration represents significant value to M&R Shareholders, as set out
in paragraph 8 below. The Offer provides M&R Shareholders with an opportunity to realise value in
cash and to divest of their M&R Shares at a premium, which is also attractive considering the low
trading volumes in M&R Shares on the JSE, as it offers M&R Shareholders an opportunity to divest of
their shareholdings in an otherwise illiquid market environment, as illustrated by the following table:
Last 30 Days prior to ATON Voluntary Offer 1
Total Volume Traded 22,076,998
% of M&R Shares in Issue 5.0%
Average Daily Traded Volume 735,900
Average Daily Traded Value ZAR7,750,783
1 The last 30 days up to 22 March 2018, being the last business day immediately prior to the date on which
ATON notified the M&R board in writing that ATON had the firm intention to make the Voluntary Offer.
5.2 The Offer Consideration represents a significant premium of 77.3% over the closing price of a M&R
Share as at 22 March 2018, being the last business day immediately prior to the date ATON notified
the M&R board in writing of ATON’s firm intention to make the Voluntary Offer (see paragraph 8
below for details on the calculation of the relevant premiums).
5.3 ATON believes the premium represented by the Offer Consideration, and the opportunity to realise
value in cash, is also attractive given the uncertain market outlook in M&R's key sectors. This
uncertainty is also reflected in M&R's order book, which has declined in each of the financial years
since 2015 and which, as M&R stated in the 2018 interim financial results presentation, is ‘admittedly
[…] low’. ATON believes that, in particular, the following trends in M&R's key markets are relevant:
5.3.1 Underground Mining: M&R’s Underground Mining operations have in the recent past been
subject to substantial pressure due to low commodity prices and mining companies’ reduced
capital expenditures on new projects, leading to a mixed picture, and, amongst others, a
decline in M&R’s revenue and operating profits from this sector in the financial year 2017. This
pressure is also reflected in M&R’s Underground Mining order book which, as of 31 December
2017, substantially decreased beyond the financial year 2016 level, although M&R recently
announced that M&R’s Underground Mining operations have been awarded new projects
representing an increase of approximately 50% on the order book as shown in the 2018 interim
financial results. ATON itself also observes increasing competitive pressure in the underground
mining sector overall, mainly due to the aforementioned factors, as well as market entries of
new national and international competitors, such as Master Drilling, which has led to increasing
margin pressure and idle capacities. In addition, while commodity prices are currently higher
than their 2015 and early 2016 lows, consensus forecasts for various commodities show limited
upside as compared to their current spot prices, and only mixed upside as compared to their
average prices during the low period 2014-2016.
5.3.2 Oil & Gas: M&R’s Oil & Gas operations have particularly suffered from a decline in revenues and
increased margin pressure over the past years, with a continuous decline in operating profits
over that period and revenues and operating margin falling substantially in the financial year
2017. This structural decline was largely a result of the transition from larger, higher-margin
greenfields projects in Australia to smaller brownfields and maintenance projects. This structural
change led to a decline in profit contributions from M&R’s Oil & Gas operations. Whereas M&R’s
Oil & Gas operations as recently as in financial year 2015 accounted for approximately 75% of
M&R’s operating profit, this share has since fallen to approximately 19% of operating profits from
continuing operations (excluding the Middle East operations which M&R plans to discontinue in
2018) in the 2018 interim financial results. Similarly, M&R’s Oil & Gas order book has also declined
significantly in the same period. M&R has stated that it expects the lack of new greenfields
opportunities to continue for several years. In addition, consensus broker reports do not predict
a significant rise in oil prices over the medium- to long-term over current spot or 2014-2016
historical average prices, putting the broader oil market under pressure.
5.3.3 Power & Water: The industry in which M&R’s Power & Water platform operates is characterized
by a high level of competition for projects and challenging market conditions, and therefore
uncertainty as to future revenue. Over the past years, M&R’s revenues in this sector have been
primarily driven by the large projects at Medupi and Kusile power stations, which are expected
to be completed in financial year 2019. These projects also contributed the major share to the
sector’s operating profit over such period. With these projects nearing completion, M&R’s order
book has declined substantially over the past financial year and M&R faces pressure to win new
projects.
5.4 In addition to the backdrop of uncertain mid- to long-term conditions in M&R’s key markets
described in paragraph 5.3 above, and M&R’s recent capital allocation decisions including a
further investment in the Gautrain-related businesses, which falls outside its stated core business of
Underground Mining, Oil & Gas, and Power & Water, ATON believes that the Offer will be beneficial
to M&R’s long-term strategic development. ATON further believes that the success of the Offer will
have a positive impact on a wide range of M&R’s stakeholders, including the South African
economy in general (see paragraph 11 below) and M&R employees. In particular, ATON is
committed to supporting M&R in maintaining its competitive position and building a more robust
platform that is better positioned to withstand volatile and uncertain market conditions. Upon
completion of the Offer, M&R’s management and employees will become part of the service-
oriented investment portfolio of ATON in Africa, the Americas, Asia and Europe. ATON would be
ready to extend to M&R its current practice of international best-practice sharing and knowledge
transfer as well as contribute further scale, which ATON believes will benefit the management,
employees and operations of M&R.
5.5 In particular, ATON is of the view that it has acquired significant expertise in the underground mining
services sector, being the sole shareholder of Redpath for now more than 10 years. ATON believes
that M&R could benefit from being under common control of a shareholder which is committed to
the mining sector and has relevant industry expertise. While, in the medium- to long-term, ATON
does not exclude the possibility of a potential business combination of Redpath with M&R, ATON
currently has no specific plans to propose and implement such a business combination in the short
term.
5.6 While ATON currently has no specific plans regarding potential divestments of non-core businesses
and portfolio investments of M&R, it may consider discussing to divest any such asset that may be
more appropriately held or may be valued more highly by other South African and/or strategic
investors. Such potential divestments are to be considered subsequent to completion of the Offer,
but may include M&R’s investments in Gautrain-related businesses.
6. INFORMATION ON ATON
6.1 ATON GmbH, a corporation established under German law in 2001, is the generation-spanning
investment vehicle of the Helmig family and is ultimately controlled by Dr. Lutz Mario Helmig. The
Helmig family was the majority owner of HELIOS clinics. In 2005, the Helmig family sold 95% of their
shares in the HELIOS clinics, at that time one of Europe’s largest clinics groups, to Fresenius AG for
€1.4 billion. ATON is headquartered in Munich, Germany, and is currently led by CEO Thomas
Eichelmann and CFO Jörg Fahrenbach. ATON particularly values integrity, respect, care and
accountability and appreciates its role as a responsible corporate citizen.
6.2 ATON pursues a conservative investment approach with a long-term view on its investments. It has
a well-diversified portfolio, both by products/services and by regions, with a focus on investments
in technology, as well as innovation-oriented markets and an emphasis on service businesses in the
B2B segments of these markets. ATON has a strong track-record in long-term value creation with
its investments. As of 31 December 2017, ATON’s investments comprised majority shareholdings in
nine different businesses and the ATON group was composed of ATON GmbH, 125 subsidiaries (of
which 114 were consolidated), 13 joint ventures (of which 12 were consolidated) and two
associates (of which one was consolidated). ATON’s consolidated revenue amounted to
€2.2 billion in 2017. Although ATON is evaluating strategic options for its investments on a regular
basis, many of its investments have been part of its portfolio for quite a long time, as is the case
with Redpath, Deilmann-Haniel Mining Systems, FFT and EDAG, all of which the ATON group
acquired in 2006.
6.3 At present, ATON operates in four different business segments. Besides the smallest business
segment AT Aviation (with revenue of €71 million in 2017), ATON’s main three business segments are
as follows:
? AT Mining: The business segment AT Mining covers services and products in the fields of mining
and shaft sinking offered by the Redpath group, a global underground mining service provider
and contractor. ATON holds 100% of the shares in Redpath, a corporation established under
the laws of Canada. The Redpath group’s core competencies include contract mining, shaft-
sinking and equipment, maintenance and renovation, as well as the development,
construction and management of subsurface mines and installations. In 2017, the business
segment generated gross revenue of €569 million (2016: €491 million), EBITDA of €65 million
(2016: €63 million) and EBIT of €34 million (2016: €32 million), corresponding to an EBITDA margin
(in percent of gross revenue) of 11.5% in 2017 (2016: 12.8%) and an EBIT margin of 6.0%
(2016: 6.5%). The business segment AT Mining employed, on average, 6,372 employees during
2017.
Redpath has over 50 years of experience in providing full service mining solutions and innovation
around the world and has built a solid reputation for being innovative and for overcoming
difficult challenges. In 2006, ATON acquired a 51% stake in Deilman-Haniel International Mining
& Tunneling GmbH (now ATM Holding GmbH), at that time the parent company of Redpath.
After having acquired the remainder of 49%, ATON became the sole shareholder in Deilmann-
Haniel and, thus, indirectly in Redpath in 2007.
Redpath has a track record of innovative approaches to completing projects safely, on
schedule and within budget. It tries to maintain a balanced risk profile, in particular in the
potash, gold, copper, silver, nickel, platinum and coal industries. The services offered by
Redpath include the generally higher margin business of raise boring which involves drilling
access points between mine levels. Furthermore, Redpath offers mechanised raise mining, i.e.,
drilling from a raised platform to create vertical openings. Redpath’s most significant service is
contract mining. Redpath has the knowledge, experience, people and equipment to build the
entire surface infrastructure and underground mine as well as the ability to provide a full
production mining service.
Headquartered in North Bay, Ontario, Redpath has management offices globally, including in
Canada (particularly in the Arctic), the United States, Germany, Australia, Chile and South
Africa. Redpath South Africa became part of the Redpath group in 2007. Redpath today owns
74% of Redpath South Africa, while 26% is owned by the South African black empowerment
company Siyakhula Sonke Corporation. Based in Johannesburg, Redpath South Africa provides
a full-range of mining services to Sub Saharan Africa. Redpath South Africa has built a
reputation for having an exceptionally strong management team which is highly skilled in
providing contract mining services to the underground mining industry.
? AT Engineering: The business segment AT Engineering covers both engineering (EDAG) and
plant construction (FFT) for the car industry, along with other branches of the mobility industry.
In 2017, the business segment generated gross revenue of €1,219 million (2016: €752 million),
EBITDA of €68 million (2016: €58 million) and EBIT of €32 million (2016: €47 million), corresponding
to an EBITDA margin of 5.6% (2016: 7.7%) and an EBIT margin of 2.6% (2016: 6.3%). The business
segment AT Engineering employed on average 7,067 employees during 2017.
EDAG represents one of the world’s largest independent engineering service providers in the
automotive industry in terms of revenue and headcount and was wholly-owned by ATON until
December 2015 when EDAG was listed on the regulated market (Prime Standard) of the
Frankfurt Stock Exchange. Since then, ATON has held a majority share in EDAG. EDAG was
deconsolidated from ATON's consolidated financial statements in 2016. As from July 2017,
EDAG was again fully-consolidated in ATON's consolidated financial statements. The EDAG
group is organised into the three lines of business: Vehicle Engineering, Production Solutions and
Electric/Electronics.
In addition, FFT is part of the business segment AT Engineering. FFT develops turnkey body
production and assembly lines for manufacturers and TIER1-suppliers of the automotive industry,
as well as for other non-automotive sectors. Among other things, the integration of modern 3D
technologies and digital factory tools, as well as the systematic use and virtual start-up of these
elements are the basis for flexible plant concepts offered by FFT.
? AT Med Tech: This business segment develops solutions for the surgery and diagnostics
healthcare market, specialising in X-ray diagnostics, basic medical diagnostics and minimally
invasive surgery, as well as products for the pharmaceuticals industry and hospitals. This business
segment employed on average 1,855 employees in 2017 and generated gross revenue of
€292 million (2016: €325 million), EBITDA of €109 million (2016: €42 million) and EBIT of €97 million
(2016: €29 million), corresponding to an EBITDA margin of 37.2% in 2017 (2016: 12.8%) and an EBIT
margin of 33.2% (2016: 9.0%).
Key investments in the AT Med Tech segment include Ziehm and OrthoScan, both specialising
in the development, production and global marketing of mobile X-ray imaging systems solutions
known as C-arms; Haema, the nationwide largest private blood donor service operating in
Germany which was sold to Grifols in March 2018 for €220 million; and – until the third quarter of
2017 – W.O.M. World of Medicine, a leading manufacturer of insufflators. In March 2017, W.O.M.
World of Medicine was sold to Novanta for €118 million and the transaction closed in the third
quarter of 2017.
6.4 ATON is a management holding company with extensive competencies regarding strategy and
financing, whereas the management of ATON’s individual investments assumes direct operative
responsibility and acts, within the applicable legal framework, within the scope agreed with the
management board of ATON in order to meet the financial and strategic objectives.
7. NATURE OF OFFER AND MECHANICS
7.1 The Offer will be a mandatory offer in terms of Parts B and C of Chapter 5 of the Companies Act
and the Takeover Regulations.
7.2 ATON intends to make the Offer to all M&R Shareholders (other than ATON and its affiliates) (each
an “Offeree”) to acquire all of the Offer Shares. The Offer shall be at the Offer Consideration, being
ZAR17.00 per Offer Share, payable in cash to each accepting Offeree. The value delivered by the
Offer Consideration is detailed in paragraph 8 of this firm intention announcement.
7.3 The terms of M&R’s various long-term incentive schemes and share option schemes and the
number of M&R Shares awarded, issued or to be awarded or issued pursuant to those schemes are
not clear from publicly available information. It is also not clear what the impact will be on M&R’s
various option schemes if M&R undergoes a change of control as a result of a corporate action
such as a takeover. Accordingly ATON recognises that it might be required to make a comparable
offer to the participants of some or all of those schemes as contemplated in Section 125 of the
Companies Act and Regulation 87 of the Takeover Regulations.
7.4 If, within four months of the date on which the Offer opens, the Offer is accepted by Offerees
holding at least 90% of the Offer Shares, ATON reserves the right, in its sole and absolute discretion,
to invoke the provisions of Section 124(1) of the Companies Act to acquire all of the Offer Shares
in respect of which the Offer was not accepted and, if so, to apply for the termination of the listing
of the M&R Shares on the JSE.
7.5 If Section 124(1) of the Companies Act cannot be invoked or ATON elects not to invoke that
Section, the M&R Shares will continue to be listed on the JSE. ATON will procure that M&R will
engage with the JSE to the extent that M&R continues to be listed on the JSE following
implementation of the Offer and M&R no longer meets the JSE’s liquidity free float requirements as
set out in the JSE Listings Requirements. If the requisite number of acceptances is obtained to allow
the provisions of Section 124(1) of the Companies Act to be invoked, and ATON elects to invoke
that Section, then a circular will be sent to those M&R Shareholders who have not accepted the
Offer, which circular will incorporate the notice envisaged by Section 124(1)(a) and a further form
of acceptance, surrender and transfer.
8. SHAREHOLDER VALUE
ATON believes that the Offer will provide M&R Shareholders with an opportunity to realise significant
and attractive value, and crystallise this value in cash, for their M&R Shares. The Offer Consideration
compared to the M&R Share price prior to ATON’s Voluntary Offer is as follows:
Price (cents) Premium (%)
Offer Consideration 1700 -
Last Closing Price 1 959 77.3%
30-day VWAP 2 1053 61.4%
90-day VWAP 3 1106 53.8%
3-year VWAP 4 1252 35.7%
1 The closing price of a M&R Share traded on the JSE as at 22 March 2018, being the last business day immediately
prior to the date ATON notified the M&R board in writing (via the firm intention letter dated 23 March 2018) that
ATON had the firm intention to make the Voluntary Offer.
2 The 30-day VWAP of a M&R Share traded on the JSE up to 22 March 2018, being the last business day
immediately prior to the date ATON notified the M&R board in writing (via the firm intention letter) that ATON
had the firm intention to make the Voluntary Offer.
3 The 90-day VWAP of a M&R Share traded on the JSE up to 22 March 2018, being the last business day
immediately prior to the date ATON notified the M&R board in writing (via the firm intention letter) that ATON
had the firm intention to make the Voluntary Offer.
4 The 3-year VWAP of a M&R Share traded on the JSE up to 22 March 2018, being the last business day
immediately prior to the date ATON notified the M&R board in writing (via the firm intention letter) that ATON
had the firm intention to make the Voluntary Offer.
9. CONDITIONS TO THE OFFER
9.1 The Offer will be subject to the fulfilment or, where applicable, waiver or adjustment of the following
suspensive conditions (collectively the “Conditions”):
9.1.1 all approvals that might be required from the Financial Surveillance Department of the South
African Reserve Bank in terms of the Exchange Control Regulations promulgated under the
Currency and Exchanges Act, 1933 (as amended) and in accordance with the requirements
of those regulations and accompanying directives and rulings, for the implementation of the
Offer, having been obtained;
9.1.2 all approvals that might be required for the implementation of the Offer pursuant to applicable
foreign investment rules or similar public law rules and regulations in all relevant jurisdictions,
other than set out above in paragraph 9.1.1, having been obtained, whereby it is believed that
such approvals are required in (but not necessarily limited to) the following authority and
jurisdiction: Foreign Investment Review Board in Australia;
9.1.3 approval of the Offer and the documents related to the Offer by the Takeover Regulation Panel
having been obtained, and the Takeover Regulation Panel having issued a compliance
certificate with respect to the Offer in terms of Section 121(b) of the Companies Act; and
9.1.4 merger control clearances or approvals (as the case may be) with respect to merger control
filings in all relevant jurisdictions: (i) having been granted unconditionally, provided that ATON
shall always reserve the right to accept any conditions attached to any such merger
clearances or approvals (as the case may be); or (ii) the applicable waiting periods having
expired or legal proceedings seeking orders to restrain the implementation of the Offer have
not been commenced or, in the case of an ongoing investigation by any competition authority,
ATON is of the view that such legal proceedings will not be commenced; or (iii) the relevant
competition authorities having, either by decision or in writing, communicated that the Offer is
not subject to a filing requirement nor opposed by the competent authority, whereby it is
believed that merger control filings are required in (but not necessarily limited to) the following
jurisdictions: Australia; Namibia; South Africa; the United States; and Zambia.
9.2 The Conditions must be fulfilled or, where waiver or adjustment is permitted, waived or adjusted,
by no later than 31 March 2019 (the “Long Stop Date”). Notwithstanding this, ATON reserves the
right and shall be entitled, in its sole and absolute discretion, but in accordance with the
requirements of the Takeover Regulations and any other applicable laws, to extend the Long Stop
Date. In the event that the Long-Stop Date is extended, the amended date will be released on
SENS and published in the South African press.
9.3 To the extent that waiver or adjustment is permitted, ATON reserves the right to, and shall be entitled
to waive or adjust (in whole or in part) any of the Conditions referred to in paragraphs 9.1.2 and
9.1.4 above. The Conditions stipulated in paragraphs 9.1.1 and 9.1.3 are not capable of waiver. In
the event that any of the Conditions is waived or adjusted, details of such waiver or adjustment will
be released on SENS and published in the South African press.
9.4 The Offer will be announced as being unconditional within one business day after the date on
which the Offer becomes unconditional in all respects.
10. FUNDING AND CASH CONFIRMATION
10.1 The Offer will be fully funded from a combination of bank facilities and cash-on-hand available to
ATON and its affiliates. For the purposes of funding the Offer, Helaba has agreed to make a loan
facility available to an affiliate of ATON, which will be primarily used by ATON together with existing
funds.
10.2 In accordance with Regulation 111(4) and Regulation 111(5) of the Takeover Regulations,
Macquarie Advisory and Capital Markets South Africa Proprietary Limited (Registration number:
2003/014483/07), and an authorised financial services provider (FSP No. 1794) registered with the
Financial Services Conduct Authority, has provided the Takeover Regulation Panel with an
irrevocable and unconditional confirmation that ATON holds sufficient cash in escrow, in favour of
the holders of relevant M&R Shares, for the purpose of fully satisfying the cash commitment in
relation to the Offer.
11. BENEFITS OF THE OFFER FOR THE SOUTH AFRICAN ECONOMY AND SOUTH AFRICA
11.1 In the face of a challenging global and domestic economic environment, in particular for the
South African mining industry which although being one of the cornerstones of the South African
economy has, for example, seen increasing layoffs in the past, the Offer represents a vote of
confidence in the South African economy by a German-owned firm. In this regard, the foreign
direct investment (“FDI”) that would result from the proposed transaction would contribute towards
the continuing recovery of the South African economy.
11.2 Furthermore, as highlighted above, the investment by an experienced multinational corporation
into South Africa is likely to result in enhanced growth and opportunities for South Africa, as well as
the transfer of skills and knowledge to local employees. This investment should not only be
beneficial to M&R but also to domestic suppliers and the South African society in general.
11.3 There are over 300 German companies operating in South Africa, which employ over 60,000
people. The Offer expands on the positive experience that German companies have received
and should encourage further investment from German and other multinational companies.
12. BROAD-BASED BLACK ECONOMIC EMPOWERMENT (“BBBEE”)
12.1 ATON understands and respects the importance of BBBEE, both in the wider context and for M&R.
12.2 ATON intends to support M&R in its continued efforts to foster the BBBEE initiatives and
transformation of its South African business as a commercial and social imperative. On this basis,
ATON is committed to determining appropriate ways to achieve these objectives in relation to
BBBEE.
13. COMPETITION ASPECTS OF THE OFFER AND PUBLIC INTEREST GAINS AND PRO-COMPETITIVE GAINS
13.1 Based on publicly available financial and other information, as well as on market knowledge, ATON
expects that the implementation of the Offer will require notification to and approval by
competition authorities in Namibia, South Africa, the United States and Zambia. Other notifications
may be required, but this will only become known in due course.
13.2 M&R, through its subsidiary Murray & Roberts Cementation Proprietary Limited, and ATON, through
its investment in Redpath, provide a wide range of services in the broad sector for the provision of
underground mining services. Given the dynamics of competition in this sector, ATON believes that
competition approval will be obtained in the countries mentioned above, as the combination of
ATON and M&R will not raise (i) competition concerns and (ii), specifically in the context of South
Africa, public interest concerns:
Competition
13.2.1 The broad sector for the provision of underground mining services functions by way of tenders:
to this end competition between all market players is significant, especially in relation to price
and service;
13.2.2 both pre- and post-implementation of the Offer, M&R and Redpath will continue to face
competition from other sophisticated competitors, such as Aveng, Barminco, Byrnecut, Master
Drilling and Shaft Sinkers, as well as, on a more international level, African Underground Mining
Services, SMD and Thyssen Schachtbau;
13.2.3 the combined entity will continue to be constrained by companies active in specific sub-
segments, but with the ability to enlarge their business operations and/or to expand their
geographic presence;
13.2.4 the combined entity will continue to be constrained by its customers, the various mining houses,
which exercise significant countervailing power and are able to, and do in many instances,
provide underground mining services in-house;
13.2.5 even where contract mining companies currently provide mining services, mining houses may
pursue a strategy of internalising the mining services;
13.2.6 in summary, the broad sector for the provision of underground mining services will continue to
remain fiercely contested after the Offer is implemented.
Public interest
13.2.7 The implementation of the Offer will have no adverse public interest effects in South Africa or
elsewhere. In particular, it will have no adverse effect on: a particular industrial sector or region;
the ability of national industries to compete in international markets; employment; and the
competitiveness of firms controlled or owned by historically disadvantaged persons;
13.2.8 in fact, the implementation of the Offer may serve to enhance the public interest. The Offer is
an investment by an experienced multinational into a major South African company. To this
end:
13.2.8.1 the FDI that the Offer represents, as well as the potential for growth for M&R once it is
controlled by ATON, will benefit the South African economy as a whole and contribute
towards its continuing recovery (see paragraph 11);
13.2.8.2 in respect of the benefits to a particular industrial sector, the skills and knowledge transfer
that will result from the implementation of the Offer may enhance M&R’s ability to serve its
customers and to develop its offering in other countries further, thereby helping to uplift the
underground mining service sector;
13.2.8.3 as regards the ability of national industries to compete in international markets, through
ATON’s global footprint M&R will have access to additional markets. This may enhance
M&R’s ability to compete with large international players which operate in South Africa and
on the African continent; and
13.2.8.4 in respect of employment, such benefits may well translate into an increase in job creation
as M&R’s business grows.
13.3 Moreover, as indicated at paragraph 12, ATON is fully committed to supporting M&R in pursuing its
continuing transformation and BBBEE objectives.
13.4 ATON is prepared to initiate relevant filings with the competition authorities in Australia, Namibia
and Zambia without undue delay. ATON has already initiated filings with the competition
authorities in South Africa and the United States. Furthermore, ATON is fully committed to engaging
with all relevant stakeholders and interested parties in order to make the implementation of the
Offer a success from a competition law and public interest perspective, and to achieve
competition approval as quickly as possible.
13.5 Besides the countries mentioned above, ATON does not currently expect that merger control
notifications in other countries will be required. However, if such additional filings should be
required, ATON is prepared to submit these without undue delay. Furthermore, merger control
authorities in certain jurisdictions have the right to investigate transactions irrespective of whether
a notification obligation exists in that jurisdiction. This could apply to, among others, Canada. For
the reasons set forth above, ATON is optimistic that the combination of ATON and M&R will also not
raise competition concerns in those countries.
14. CONCERT PARTIES
Other than ATON AT, ATON has no concert parties in respect of the Offer.
15. IRREVOCABLE UNDERTAKINGS TO ACCEPT THE OFFER
No person is irrevocably committed, or has given any irrevocable undertakings, to accept the Offer.
16. ARRANGEMENTS, UNDERTAKINGS OR AGREEMENTS IN RELATION TO THE OFFER SHARES
16.1 Save for the Forward Sale Agreement referred to at paragraph 1.1.2, no agreement, arrangement
or understanding which has a connection with or dependence upon the Offer, exists between
ATON, or any person acting in concert with it, and any of the directors of M&R or persons who were
directors within the preceding 12 months, or holders of M&R Shares or persons who were holders of
M&R Shares within the preceding 12 months.
16.2 In terms of the Forward Sale Agreement, ATON AT acquired 29,005,926 M&R Shares from Allan Gray
at a purchase price of ZAR15.00 per M&R Share (“Sale Price”), provided that in the event ATON
increased the offer consideration pursuant to its Voluntary Offer to a price which is higher, or should
ATON make an alternative offer at a higher price within the first 90 calendar days after the
Voluntary Offer has opened (each such price, a “Higher Price”), then ATON AT would pay Allan
Gray the Rand amount equal to the difference between the Sale Price and the Higher Price, in
respect of each M&R Share sold to ATON AT pursuant to the Forward Sale Agreement.
17. RESPONSIBILITY STATEMENT
Subject to the disclaimer below, the ATON board accepts responsibility for the information contained
in this firm intention announcement, accepts full responsibility for the accuracy of such information
and certifies that, to the best of its knowledge and belief, the information contained in this firm
intention announcement is true and nothing has been omitted which is likely to affect the importance
of the information.
18. DISCLAIMER
18.1 Information included in this firm intention announcement relating to M&R and its business has been
derived solely from publicly available sources.
18.2 While ATON has included information in this firm intention announcement regarding M&R that is
known to ATON based on publicly available information, ATON has not had access to non-public
information regarding M&R and could not use such information for the purpose of preparing this
firm intention announcement. Although ATON is not aware of anything that would indicate that
statements relating to M&R contained in this firm intention announcement are inaccurate or
incomplete, ATON is not in a position to verify information concerning M&R. ATON and its directors
and officers are not aware of any errors in such information. Subject to the foregoing and to the
maximum extent permitted by law, ATON and its directors and officers disclaim all liability for
information concerning M&R included in this firm intention announcement.
19. POSTING OF THE OFFER DOCUMENT
ATON intends posting the Offer document on 31 May 2018, and in any event within one month from
the date of this firm intention announcement, as required in terms of Section 123 of the Companies
Act.
Sandton
28 May 2018
Financial advisor to ATON
Macquarie
Legal advisor to ATON
Bowmans
IN THIS ANNOUNCEMENT, UNLESS THE CONTEXT INDICATES OTHERWISE, REFERENCE TO “ATON” SHALL BE
DEEMED TO INCLUDE REFERENCES TO ATON AT, AND REFERENCES TO AN “AFFILIATE” OF ATON SHALL MEAN
ANY OTHER PERSON THAT, DIRECTLY OR INDIRECTLY, THROUGH ONE OR MORE INTERMEDIARIES, CONTROLS,
OR IS CONTROLLED BY, OR IS UNDER COMMON CONTROL WITH, ATON.
* REFERENCES TO ALLAN GRAY ARE TO ALLAN GRAY ACTING ON BEHALF OF ITS CLIENTS, WHO ARE THE
BENEFICIAL OWNERS OF THE RELEVANT M&R SHARES.
THIS FIRM INTENTION ANNOUNCEMENT IS NOT A MANDATORY OFFER. IT IS AN ANNOUNCEMENT OF THE FIRM
INTENTION TO MAKE A MANDATORY OFFER. THE INTENDED MANDATORY OFFER WILL NOT BE MADE, DIRECTLY
OR INDIRECTLY, IN OR INTO, OR BY USE OF THE MAILS OF, OR BY ANY MEANS OR INSTRUMENTALITY (INCLUDING,
WITHOUT LIMITATION, TELEPHONICALLY OR ELECTRONICALLY) OF INTERSTATE OR FOREIGN COMMERCE OF, OR
ANY FACILITY OF THE NATIONAL SECURITIES EXCHANGES OF ANY JURISDICTION IN WHICH IT IS ILLEGAL OR
OTHERWISE UNLAWFUL FOR THE OFFER TO BE MADE OR ACCEPTED, INCLUDING (WITHOUT LIMITATION)
AUSTRALIA, CANADA, JAPAN AND THE UNITED STATES (ANY SUCH JURISDICTION, A “RESTRICTED
JURISDICTION”), AND THE MANDATORY OFFER CANNOT BE ACCEPTED BY ANY SUCH USE, MEANS,
INSTRUMENTALITY OR FACILITY OR FROM WITHIN A RESTRICTED JURISDICTION. ACCORDINGLY, NEITHER COPIES
OF THE OFFER CIRCULAR NOR ANY RELATED DOCUMENTATION ARE BEING OR MAY BE MAILED OR OTHERWISE
DISTRIBUTED OR SENT IN OR INTO OR FROM A RESTRICTED JURISDICTION, AND IF RECEIVED IN ANY RESTRICTED
JURISDICTION, THE OFFER CIRCULAR SHOULD BE TREATED AS BEING RECEIVED FOR INFORMATION PURPOSES
ONLY.
Date: 28/05/2018 05:42:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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