The failure may impede Hillsdown's efforts to expand in North America.
Hillsdown owns 56 per cent of Canada's largest food processing company, Maple Leaf Foods. MLF in turn owns 66 per cent of Corporate Foods, a major baker.
MLF - with interests in meat, poutltry, seafood and animal feed - was offering the 34 per cent outstanding Corporate shareholders its shares or Cdollars 19.90 ( pounds 8.60) in cash. Some institutional shareholders thought they should be offered Cdollars 25 a share.
The vote among the minority was close but the dissenters won 52 per cent to 48 per cent.
Hillsdown was hoping to use Corporate as a vehicle for expansion in the US but it would have needed to borrow money.
After the vote of the minority shareholders a spokesman for Hillsdown said the acquisition strategy was under review.
The offer will not be revised upwards but Hillsdown will hang on to its 56 per cent stake in MLF.
Sir Harry Solomon, Hillsdown chairman, said: 'We felt the offer was fair and, if completed, would have simplified the group's structure in North America.'
He added: 'We are confident that both Corporate Foods and Maple Leaf Foods will continue to perform well in future.'Reuse content