Competition authority wants to block acquisition of Murray & Roberts by Aton

It has found that the merging parties are close competitors.

South Africa’s competition authority has recommended that the proposed long-standing acquisition of Murray & Roberts (M&R) by Aton be prohibited.

The Competition Commission found that the merging parties are close competitors and that deal will result in the removal of their closest and strongest competitor.

M&R has, like other major construction groups in South Africa, been facing severe headwinds due to falling private and public spending on infrastructure and other construction projects.

Aton, the acquiring group, is a company incorporated in accordance with the laws of Germany and the company controls a number of firms including Remgro-Capevin Investments, Financial Securities, Unilever South Africa Holdings and others.

In South Africa, the Aton Group through Redpath SA, provides a range of mining services to Sub-Saharan Africa including the excavation of vertical or inclined openings from the surface for conveyance of miners, materials, ventilation, pumping water, in addition to hoisting ore and waste rock, operational or maintenance activities, infrastructure development and upgrade and whole of mine operational management.

M&R, a company listed on the JSE, focuses its expertise and capacity on delivering sustainable and fit-for-purpose project engineering, procurement, construction, commissioning, operations and maintenance solutions.

The company also delivers its capabilities into three global sectors: oil & gas; underground mining; and power & water.

During the Competition Commission’s investigation of the deal, it received concerns that the proposed transaction will potentially negatively impact potential competitors. The concerns were that the merger will potentially create a company that has such size and scale that it has the financial wherewithal to throttle competition.

“Further, the merger will create a company that potentially has the financial muscle to buy projects or to discount projects to such an extent that other companies cannot compete.”