Murray & Roberts plans to buy rival Concor for R282m
September 5, 2005
By Roy Cokayne
Pretoria - Murray & Roberts (M&R), the listed construction company, said on Friday it would gobble up its smaller rival, Concor, for R282.4 million - a move that was already supported by 60 percent of the shareholders in Concor.
The proposed acquisition is linked to a plan by M&R to explore separate structures for its local businesses. M&R said it wished to introduce an appropriate empowerment partner into Concor to engage the opportunities presented by the local construction market.
Brian Bruce, M&R's group chief executive, said it was predicting significant growth in the reconstruction economy in southern Africa and, with that sort of growth predicted, it was specifically identifying different elements of construction market.
Bruce added that the volume of work anticipated in South Africa was such that M&R needed to think differently on how it structured its different businesses.
Gavin Bantam, a construction sector analyst at Nedcor Securities, said the announcement was positive for M&R, which had wrapped up 60 percent of Concor and would therefore at the very least control the company.
Bantam said the R22.30 a share offer to other shareholders was fair.
M&R is a large company orientated to the private sector, such as the mining houses, industrial groups, and companies in the commercial and retail sectors. Concor does some of this sort of work but is predominantly orientated towards the public sector.
Bruce said: "We will explore separate structures for our local businesses, which will be a mechanism of creating some type of market differentiation.
"In South Africa, black economic empowerment is a feature of our lives and the pending construction charter does not differentiate between the criteria for public or private sector jobs.
"But the dynamics of the type of contracting and the disciplines required for those jobs is different."
M&R said on Friday that it had an irrevocable undertaking from Hochtief, Concor's controlling shareholder which has reduced its stake in the company from 49 percent to 44.99 percent, to sell its stake to M&R for R19.77 a share.
The group said it had also received an irrevocable undertaking from the trustees of the Concor Share Incentive Trust to vote in favour of the scheme.
M&R has proposed a scheme of arrangement in terms of which other Concor shareholders are being offered R22.30 a share.
If the scheme is successful, Concor will become a subsidiary of M&R and be delisted from the JSE.
M&R added that Standard Bank had confirmed to the Securities Regulation Panel (SRP) that M&R had sufficient cash resources available to satisfy its obligations in terms of the offer.
The offer is subject to the approval of the high court, the SRP, the JSE, competition authorities and other regulatory authorities.
Reuters reported that Hochtief had said in Germany that the sale would raise e15 million (R117 million) for the company and was a further step to streamline its international investments.
M&R shares surged 4.29 percent to R17 on Friday. The construction sector rose 0.68 percent.
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