Astec upbeat on results as it fends off Emerson bid
Tuesday 10 February 1998
Unveiling its full-year results, Astec forecast a growth rate of more than 7 per cent and said it was "well-positioned to meet its continued sales growth and earnings objectives".
Meanwhile, Astec's independent directors called on shareholders to oppose a motion seeking to remove three executive directors from the board. Emerson has requisitioned an extraordinary general meeting, to be held on 9 March, to remove Mike Arrowsmith, the finance director, and two other executives from the board and replace them with Emerson appointees. The move would give Emerson a majority on the board and allow it to carry out its threat to suspend Astec's dividend payments.
But Astec's directors yesterday said they considered each of the three men "to be very important to the company's future prosperity" and arguedthe strong results showed the quality of Astec's management.
Last week, institutional shareholders including Royal & SunAlliance and Electra Fleming, revealed they were considering legal action against Emerson on the grounds that it had acted with "unfair prejudice" against minority shareholders. The institutions hope to bring their case to court by the end of next week.
Astec's results contradict the warning issued by Emerson last month when it made an informal bid for the 49 per cent of Astec it does not already own. At the time, Emerson said that the upheaval in Far Eastern markets was likely to damage Astec's business.
However, Astec yesterday claimed that instability in Asian currencies had a "minimal impact" on sales. Indeed, it argued that the currency devaluations had benefited the company by allowing it to sell more cheaply from its Asian currency base.
A spokesman for Emerson said the statement contained "nothing new". In a further embarrassment for Emerson, the statement was signed by Howard Lance, the Astec chief executive appointed by Emerson.
Astec shares reacted positively to the results, rising 2p to 127p. When Emerson announced its intention to make an offer at the prevailing market price, the shares were 111p.
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