Peter Thal Larsen finds that, despite the prospect of a lengthy tussle, Astec's minority shareholders are not prepared to give up their shares without a fight.
At the egm, Emerson, which owns just over 51 per cent of Astec, will propose the removal from the board of finance director Mike Arrowsmith and executive directors Michael Smith and Neal Stewart. They will be replaced with three non-executive directors, nominated by Emerson, thereby giving Emerson control of the board.
Emerson already controls two of Astec's non-executive directors as well as Howard Lance, Astec's chief executive, who is a former Emerson employee. Together, the six would outnumber the four independent directors, who would remain on Astec's board.
The move is part of Emerson's plan, announced on Monday, to take full control of Astec. At the same time, Emerson announced that it planned to stop Astec from paying a dividend.
Emerson believes that the Asian turmoil will damage Astec's business and that the company would be better off as part of a larger group like Emerson. On Monday, it made an approach to buy out the minority shareholders at a share price of 111p. However, that approach was rejected as "wholly inadequate" by Astec's independent directors.
Last night, advisers to both companies were settling in for a lengthy battle. Under company law, Emerson now has 21 days in which to announce the date of the egm. The announcement must be made at least four weeks before the egm is due to take place.
However, Astec's minority shareholders are in no mood to give in. "The offer is highly opportunistic," said one institutional shareholder. "We're not going to be bounced into accepting it."
Astec's independent directors are currently taking legal advice about the current position, which is believed to be unprecedented in recent takeover history. They are thought to be examining the validity of Emerson's threat to suspend dividend payments.
Emerson, however, has yet to make a formal offer for the 49 per cent of Astec it does not already own. With Astec shares currently at 120p - they gained 0.5p yesterday - an offer at 111p would be unlikely to succeed.
Under a company law which protects the rights of minority shareholders, Emerson would have to win acceptances for 90 per cent of the shares it does not already own in order to succeed in its aim of taking control. "No institution considers this offer to be full and fair," a shareholder said. "Emerson can talk until they're blue in the face but they can't force us to accept it."
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