The allegation is contained in a petition filed at the High Court last week by a number of institutional shareholders in Astec.
The petition also alleges that at an August 1997 meeting of Astec's audit committee, James Berges, an Emerson-nominated director, only agreed to the payment of an interim dividend if the committee adopted the lower of two available profit figures for the period.
At the end of August, Astec reported pre-tax profits of pounds 13m. The figures, which were below analysts' expectations, wiped more than 20 per cent off the shares in just a few days.
Emerson dismissed the allegations. A spokesman said: "We don't intend to comment on the detail of the petition, but we reject completely the allegations contained inside it and intend to fight them vigorously."
Institutional shareholders, including Electra Fleming and Norwich Union, accuse Emerson's actions of being "unfairly prejudicial" to minority shareholders and in contravention of section 459 of the Companies Act. They argue that the events leading to the court action have forced them to sell their shares in Astec, even though they previously had no plans to do so.
They have asked the court to force Emerson to buy their shares at a "fair value". However, the court also has the power to take any other action it might see fit.
The allegations emerged as Emerson yesterday carried out its threat to remove three executive directors from Astec's board.
At an extraordinary meeting called by Emerson, the company used its 51 per cent shareholding to vote finance director Mike Arrowsmith, the technical director Neal Stewart and the manufacturing director Mike Smith, off the board.
They were replaced by three Emerson nominees: Stephen Cortinovis, Olivier Delage and Robert Staley. The three will become non-executive directors.
The move gives Emerson representatives a majority on the Astec board, allowing them to carry out their proposed policy of ceasing dividend payments by Astec.
Numerous institutional and private shareholders had flocked to the EGM to voice their disapproval at Emerson's tactics. However, nobody from the US company showed up. Instead, it was represented by three lawyers from Norton Rose, Emerson's legal advisers, who voted the shares on the company's behalf.Reuse content