Royal & Sun Alliance and Electra Fleming, two of the company's biggest institutional investors, stepped up the pressure on Emerson, the US engineering giant which controls 51 per cent of Astec. Emerson astonished non-executive directors of Astec last month when it announced plans to buy out minority investors, remove three executive directors from the board and stop paying out dividends.
The two shareholders last night said they were "considering court proceedings" against Emerson under section 459 of the Companies Act, which deals with attempts by big investors to prejudice the interests of other shareholders.
In a statement Royal & Sun Alliance, which speaks for just over 5 per cent of Astec, added that Emerson was "considered to be influencing the affairs of the company to the detriment of other shareholders."
The institution cited the move by Emerson to call an extraordinary shareholders' meeting to approve the changes. Last month 18 institutions put their names to a letter condemning the plans as a "blatant disregard" of their interests.
The news came after independent directors of Astec opposed to Emerson's plans yesterday called on shareholders to consider the legal position.
The directors, led by deputy chairman Peter Marshall, who was deputy chief executive of the former Plessey electronics and defence business, said dissident directors were prevented from going to court themselves under company law.
Although Emerson has not launched a formal offer to take full control of Astec, it outlined an indicative bid to buy the shares at the current market price, which yesterday fell 0.5p to 124p.Reuse content