Wrap Text
GEN – General – Firm intention announcement by ATON GmbH
GEN – General – Firm intention announcement by ATON GmbH or a nominated wholly-owned subsidiary to
make an offer to acquire all the issued shares of Murray & Roberts Holdings Limited not already owned by
ATON GmbH or its affiliates, at ZAR15.00 per share, payable in cash
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 AN OFFER TO ACQUIRE ALL THE ISSUED
SHARES OF MURRAY & ROBERTS HOLDINGS LIMITED (“M&R”), NOT ALREADY OWNED BY ATON OR ITS AFFILIATES
AT ZAR15.00 PER SHARE, PAYABLE IN CASH
1. INTRODUCTION
1.1 The shareholders of M&R are advised that, on 23 March 2018, ATON notified the board of directors
of M&R (“M&R Board”) in writing that ATON has the firm intention to make an offer, through its
nominated wholly-owned subsidiary ATON Austria Holding GmbH (“ATON AT”), to all the
shareholders of M&R other than ATON or ATON’s affiliates (“Offer”), to acquire all the remaining
issued and to be issued ordinary shares of M&R not already owned by ATON or any of its affiliates
(“Offer Shares”), at a price of ZAR15.00 per Offer Share (“Offer Price”) on the basis set out in this
announcement. Further details of ATON and ATM are set out in paragraph 3.
1.2 As at close of business on 22 March 2018, ATON AT held 133,414,339 issued ordinary shares in M&R,
and on 23 March 2018 ATON reached an agreement to purchase a further 13,671,480 ordinary
shares in M&R, representing an ownership interest of approximately 29.9985%, or approximately
33.1% including the further shares to be purchased, of the entire issued share capital of M&R, based
on M&R’s total issued share capital being 444,736,118 issued ordinary shares (“M&R Shares”), which
translates to approximately 30.2%, or approximately 33.3% including the further shares to be
purchased, of the voting rights of M&R taking into account non-voting shares including those
repurchased by M&R under its share repurchase programme until 2 November 2017 (“Existing ATON
Shareholding”).
1.3 In this announcement, 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.
1.4 The M&R Board and ATON have on a number of occasions engaged in discussions regarding a
possible transaction between ATON and M&R. ATON always stressed during those discussions that
the ownership of a controlling stake constitutes for ATON a pre-requisite of any potential
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transaction. Against this background, the parties discussed numerous transaction structures
including, among other things, a transaction involving a contribution in kind by ATON of the entire
share capital of ATON’s Canadian subsidiary, Redpath Mining Inc. (formerly J.S. Redpath Holding
Inc. “Redpath”) into M&R in exchange for the issue of ordinary shares in M&R to ATON, combined
with a further share issue by M&R to ATON for cash. The parties also discussed potential deviating
transaction structures, including the contribution of Redpath’s shares into M&R in conjunction with
a partial offer made by ATON to M&R's shareholders via a scheme of arrangement. The outright
acquisition of a controlling stake in M&R by ATON was also brought forward as a transaction
scenario. In particular, at the end of March 2016 and in April 2016, the parties intensified their
preliminary discussions on, among other things, possible transaction structures and indicative
parameters for the relative valuation of the businesses. Although the parties jointly concluded that
there is a strategic rationale for the proposed business combination for both M&R and ATON, the
parties had differing views on the structure of the proposed transaction. These differing views
concerned, in particular, a structure to be submitted to M&R’s general meeting by M&R’s
management whereby ATON would acquire a controlling stake in M&R. For this and other reasons,
including the ongoing divestment of M&R's Infrastructure & Building platform at that time, it was
concluded that such a structure would not be the best way through which to implement the
transaction. In contrast, the parties believed that M&R’s shareholders are best suited to assess any
premium offered to them by ATON. As a consequence, the discussions were ultimately terminated.
1.5 Between mid-February and mid-April 2017, ATON acquired a material interest in M&R.
1.6 Following a thorough internal deliberative process within ATON regarding strategic options, ATON
has decided to make this Offer to all M&R’s shareholders (“M&R Shareholders”) (other than ATON
and its affiliates), who should be given the opportunity to decide for themselves whether to accept
the Offer.
1.7 ATON has advised the M&R Board that it has obtained an irrevocable undertaking to accept the
Offer from Allan Gray Proprietary Limited, acting not as principal but on behalf of its clients ,
representing in aggregate approximately: (i) 16.3% of the Offer Shares, and (ii) 10.9% of all M&R
Shares. Further details regarding this irrevocable undertaking are set out in paragraph 6 below.
2. RATIONALE FOR THE OFFER AND BENEFITS OF THE OFFER FOR M&R
2.1 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 5 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:
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Last 30 Days 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 ZAR 7,750,783
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 (via the Firm Intention Letter) that ATON has the firm intention to make the Offer.
2.2 The Offer Price represents a significant premium of 56.4% 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 (via the Firm Intention Letter) that ATON has the firm intention to make the Offer
(see paragraph 5 below for details on the calculation of the relevant premiums).
2.3 ATON believes the premium represented by the Offer Price, 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:
2.3.1 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 25% 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.
2.3.2 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
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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.
2.3.3 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.
2.4 In addition to the backdrop of uncertain mid- to long-term conditions in M&R’s key markets
described in paragraph 2.3 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 10 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.
2.5 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
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currently has no specific plans to propose and implement such a business combination in the short
term.
2.6 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.
3. INFORMATION ON ATON
The M&R Board has been provided with the following information relating to ATON:
3.1 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.
3.2 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 2016, ATON’s investments comprised majority shareholdings in
11 different businesses and the ATON group was composed of ATON GmbH, 85 subsidiaries (of
which 77 were consolidated), 13 joint ventures (of which 12 were consolidated) and two associates
(of which one was consolidated). ATON’s consolidated revenue amounted to €1.6 billion in 2016.
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 Produktionssysteme GmbH & Co. KG (“FFT”) and EDAG
Engineering Group AG (“EDAG”), all of which the ATON group acquired in 2006.
3.3 At present, ATON operates in four different business segments. Besides the smallest business
segment AT Aviation (with revenue of €66 million in 2016), ATON’s main three business segments are
as follows:
3.4 AT Mining:
3.4.1 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
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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 2016, the business
segment generated gross revenue of €491 million (2015: €466 million), EBITDA of €63 million
(2015: €58 million) and EBIT of €32 million (2015: €31 million), corresponding to an EBITDA margin
(in percent of gross revenue) of 12.8% in 2016 (2015: 12.4%) and an EBIT margin of 6.5% (2015:
6.8%). The business segment AT Mining employed, on average, 5,245 employees during 2016.
3.4.2 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.
3.4.3 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.
3.4.4 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.
3.5 AT Engineering:
3.5.1 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 2016, the business
segment generated gross revenue of €752 million (2015: €1,294 million), EBITDA of €58 million
(2015: €439 million) and EBIT of €47 million (2015: €400 million), corresponding to an EBITDA
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margin of 7.7% (2015: 33.9%) and an EBIT margin of 6.3% (2015: 30.9%). The significant decrease
in revenue and earnings both result from an accounting effect subsequent to the de-
consolidation of EDAG in the context of its initial public offering in December 2015. Therefore,
the business segment AT Engineering only comprised FFT in the financial year 2016. The business
segment AT Engineering employed on average 2,716 employees during 2016.
3.5.2 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.
3.5.3 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.
3.6 AT Med Tech:
3.6.1 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 2,044 employees in 2016 and generated gross revenue of €325 million
(2015: €297 million), EBITDA of €42 million (2015: €32 million) and EBIT of €29 million (2015:
€20 million), corresponding to an EBITDA margin of 12.8% in 2016 (2015: 10.6%) and an EBIT
margin of 9.0% (2015: 6.8%).
3.6.2 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.
3.7 ATON is a management holding company with extensive competencies regarding strategy and
financing, whereas the management of ATON’s individual investments assumes direct operative
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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.
4. NATURE OF OFFER AND MECHANICS
4.1 The Offer will be made pursuant to a tender offer in terms of Parts B and C of Chapter 5 of the
Companies Act, 2008 (as amended, the “Companies Act”) and in accordance with the Takeover
Regulations prescribed by the Minister of Trade and Industry in terms of Section 120 of the
Companies Act (the “Takeover Regulations”).
4.2 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. Subject to paragraph 4.3, the Offer shall be at a
price of ZAR15.00 per Offer Share (the “Offer Price”), payable in cash to each accepting Offeree.
The value delivered by the Offer Price is detailed in paragraph 5 of this firm intention
announcement.
4.3 The Offer is based on the following assumptions, which ATON has made in good faith solely on the
basis of publicly available information:
4.3.1 M&R has 297,650,299 Offer Shares in issue being determined as the total number of M&R Shares
of 444,736,118 less 133,414,339 M&R Shares held by ATON and less the additional 13,671,480 M&R
Shares to be purchased by ATON, in terms of the acquisition referred to in paragraph 7 below;
4.3.2 M&R, from the date of this announcement to the completion of the Offer, does not declare or
pay out any dividends (with the exception of any dividends paid out prior to the Closing Date
for the financial year ending 30 June 2018 up to a maximum amount of ZAR 0.45 per M&R Share),
any other returns of capital or any distributions of any nature as envisaged under the
Companies Act, the JSE Listings Requirements or the Income Tax Act, No. 58 of 1962 (as
amended) (the “Income Tax Act”);
4.3.3 no additional M&R Shares or securities will be issued pursuant to any M&R staff or management
incentive schemes or any other circumstance as a consequence of the implementation of the
Offer; and
4.3.4 until the Offer closes, the business of M&R will continue to be conducted in the ordinary course
and in accordance with its approved business plans and budgets.
The Offer Price will be adjusted downward to take into account any assumption set out in this
paragraph 4.3 which turns out to be incorrect, including any dividends (with the exception of any
dividends paid out prior to the Closing Date for the financial year ending 30 June 2018 up to a
maximum amount of ZAR 0.45 per M&R Share), any other returns of capital or any distributions of
any nature as envisaged under the Companies Act, the JSE Listings Requirements or the Income
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Tax Act, declared or paid, any M&R Shares issued or any M&R share options granted or exercised
or any binding agreement to do any of the foregoing, prior to completion of the Offer.
4.4 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.
4.5 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. 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.
5. 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 Price compared
to the M&R Share price is as follows:
Price (cents) Premium (%)
Offer Price 1500 -
Last Closing Price1 959 56.4%
30 Day VWAP2 1053 42.4%
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) that
ATON has the firm intention to make the Offer.
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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 has the firm intention to make the Offer.
6. IRREVOCABLE UNDERTAKING TO ACCEPT THE OFFER
6.1 ATON has obtained an irrevocable undertaking from Allan Gray Proprietary Limited (“Allan Gray”),
Allan Gray acting not as principal but on behalf of its clients, in terms of which (among other things)
Allan Gray has irrevocably undertaken, with respect to the following Offer Shares owned
beneficially by Allan Gray’s clients, and on the terms and subject to the conditions of such
irrevocable undertaking, to accept the Offer on its terms and subject to its Conditions:
Shareholder Holding Percentage of M&R Percentage of Offer
Shares Shares
Allan Gray Proprietary Limited (1) 48 434 209 approx. 10.9% approx. 16.3%
(1) Allan Gray’s clients are the beneficial owners of, or otherwise directly or indirectly control, the M&R Shares
and Allan Gray would therefore be following its clients’ rights on their behalf.
6.2 Together with the Existing ATON Shareholding (including the M&R Shares to be acquired as
described in paragraph 7), the irrevocable undertaking represents a cumulative shareholding of
44.0% of all M&R Shares.
7. AGREEMENT TO ACQUIRE FURTHER M&R SHARES
ATON, on 23 March 2018, reached an agreement to purchase a further 13,671,480 M&R Shares for a
purchase price of ZAR15.00 per share. Settlement of this acquisition is expected to take place on 29
March 2018.
8. CONDITIONS TO THE OFFER
8.1 The Offer will be subject to the fulfilment or, where applicable, waiver of the following suspensive
conditions (collectively the “Conditions”):
8.1.1 valid acceptances of the Offer having been received from M&R Shareholders in relation to that
number of M&R Shares which, together with the Existing ATON Shareholding, shall constitute at
least 50% (fifty percent) of all M&R Shares (on a fully diluted basis) plus one additional M&R
Share, provided that ATON at all times reserves the right to reduce this minimum acceptance
threshold;
8.1.2 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
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of those regulations and accompanying directives and rulings, for the implementation of the
Offer, having been obtained;
8.1.3 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 8.1.2, 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;
8.1.4 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;
8.1.5 approval of the JSE (where applicable) having been obtained; and
8.1.6 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; South Africa; the United States; and Zambia.
8.2 The Conditions must be fulfilled or, where waiver is permitted, waived, 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.
8.3 To the extent that waiver is permitted, ATON reserves the right to, and shall be entitled to waive (in
whole or in part) any of the Conditions referred to in paragraphs 8.1.1, 8.1.3 and 8.1.6 above. The
Conditions stipulated in paragraphs 8.1.2, 8.1.4 and 8.1.5 are not capable of waiver. In the event
that any of the Conditions is waived, details of such waiver will be released on SENS and published
in the South African press.
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8.4 The Offer will be announced as being unconditional within one business day after the date on
which the Offer becomes unconditional in all respects.
8.5 If the Condition referred to in paragraph 8.1.1 is fulfilled, but the number of acceptances of the
Offer received from Offerees subsequently falls below the threshold contemplated in that
paragraph as a result of Offerees withdrawing their acceptances in accordance with
Regulation 105 of the Takeover Regulations, then ATON shall be entitled to either: (i) proceed with
the Offer in relation to acceptances received; or (ii) terminate the Offer at any time prior to the
Offer being announced as being unconditional in all respects. In the event that the Offer is
terminated, an announcement will be released on SENS and published in the South African press.
9. FUNDING AND CASH CONFIRMATION
9.1 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.
9.2 In accordance with Regulation 111(4) and Regulation 111(5) of the Takeover Regulations,
Macquarie Capital South Africa Proprietary Limited 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.
10. BENEFITS OF THE OFFER FOR THE SOUTH AFRICAN ECONOMY AND SOUTH AFRICA
10.1 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 retrenchments 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.
10.2 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.
10.3 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.
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11. BROAD-BASED BLACK ECONOMIC EMPOWERMENT (“BBBEE”)
11.1 ATON understands and respects the importance of BBBEE, both in the wider context and for M&R.
11.2 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 imperative. On this basis, ATON is
committed to determining appropriate ways to achieve these objectives in relation to BBBEE.
12. COMPETITION ASPECTS OF THE OFFER AND PUBLIC INTEREST GAINS AND PRO-COMPETITIVE GAINS
12.1 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 Australia, South Africa, the United States and Zambia. Other notifications
may be required, but this will only become known in due course.
12.2 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
12.2.1 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;
12.2.2 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;
12.2.3 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;
12.2.4 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;
12.2.5 even where contract mining companies currently provide mining services, mining houses may
pursue a strategy of internalising the mining services;
14
12.2.6 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
12.2.7 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;
12.2.8 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:
12.2.8.1 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 10);
12.2.8.2 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;
12.2.8.3 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
12.2.8.4 in respect of employment, such benefits may well translate into an increase in job creation
as M&R’s business grows.
12.3 Moreover, as indicated at paragraph 11, ATON is fully committed to supporting M&R in pursuing its
continuing transformation and BBBEE objectives.
12.4 ATON is prepared to initiate relevant filings with the competition authorities in Australia, South
Africa, the United States and Zambia without undue delay. 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.
12.5 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
15
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.
13. 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.
14. DISCLAIMER
14.1 Information included in this firm intention announcement relating to M&R and its business has been
derived solely from publicly available sources.
14.2 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.
15. POSTING OF THE OFFER DOCUMENT
ATON intends posting the Offer document on 5 April 2018, and in any event within 20 business days
from the date of this firm intention announcement, as specified in the Takeover Regulations.
Sandton
26 March 2018
Financial advisor to ATON
Macquarie
Legal advisor to ATON
Bowmans
16
THIS FIRM INTENTION ANNOUNCEMENT IS NOT AN OFFER. IT IS AN ANNOUNCEMENT OF THE FIRM INTENTION TO
MAKE AN OFFER. THE INTENDED 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 A 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 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: 26/03/2018 08:10:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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