Emerson changes tactics in battle with Astec investors
Tuesday 17 March 1998
Meanwhile, Emerson also revealed that talks with Astec's independent directors about securing their recommendation for an offer had broken down. Emerson and its advisers are understood to have been willing to offer about 118p per share, compared to an earlier indicative offer of 111p. However, Astec's independent directors had held out for more.
"These discussions have now been terminated," Emerson said yesterday. The news pushed Astec shares down 4p to 117p.
In a statement, Astec's board, which is now controlled by Emerson nominees, said it had decided to pay a final dividend. Emerson had previously threatened the company's minority shareholders that it was considering cutting the dividend completely.
Astec's final dividend has been revised from 1.41p to 1.25p, making a total dividend of 1.94p. This is still an increase of 7.8 per cent over 1996.
Last night, City experts said the move was a clear attempt by Emerson to undermine the court case that institutional shareholders in Astec have started against the US company. The institutions have argued that Emerson's threat to cut the dividend unfairly prejudices their interests. They also allege that a director nominated by Emerson forced the company to report a lower interim profit figure last August. The move prompted a sharp fall in Astec's share price.
Emerson said it rejected the allegations and that it was seeking to have the petition dismissed. The company yesterday applied to the High Court to strike out the proceedings.
In a further development, Astec announced that it would ask for Neal Stewart, the group's technical director who was one of the company's founders, to be reinstated to the board at the company's annual general meeting. Mr Stewart was one of Astec's three executive directors who was voted off the board by Emerson at an extraordinary general meeting last week.
A spokesman for Emerson said that Astec had a limit of 10 directors, requiring it to replace three directors with its own appointees to get a majority. Now that it had a majority, it would seek to increase the number of board members, allowing it to bring back Mr Stewart.
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