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Embattled Astec slashes dividend

ASTEC (BSR), the electronics group which was the subject of a controversial shareholder battle earlier this year, yesterday slashed its dividend and issued a profit warning after announcing a $325m acquisition. "We thought the second quarter was going to be the bottom, but the third quarter is down even further," said Howard Lance, Astec's chief executive. "With the overcapacity in the market, the pricing has got more aggressive."

Meanwhile, Astec announced plans to buy the Advanced Power Systems Business of Nortel, a Canadian telecom equipment group which makes power conversion products for a variety of Nortel products, for $325m in cash.

Earlier this year Emerson Electric, the US giant which owns 51 per cent of Astec's shares, attempted to buy out the remaining minority. At the time, Emerson warned that if its offer - which was pitched at the market price of 111p per share - was rejected, it would use its clout on Astec's board to stop dividend payments.

Institutional shareholders, including Electra Fleming, Royal & SunAlliance and Equitable Life - challenged the threat in the courts, but their case was thrown out.

Since then, Astec shares have drifted downward. Yesterday, they closed down 2.5p at 80p.