Outlook: US Goliath faces Astec investors

If Mrs Beckett does decide to overhaul the Companies Act, then she may like to beef up its provisions relating to the protection of minority shareholders, since it is not clear what an army of Hampel, Cadbury and Greenbury committees can do about the goings on at Astec (BSR).

To recap, Astec's minority shareholders are attempting to stand up to a classic piece of bullying from Emerson, the American electronics giant. Emerson controls 51 per cent of the company and, in its old-fashioned way, wants to buy the rest on the cheap, warning that if its proposals are not accepted the minorities can kiss goodbye to their dividends.

To show it means business, Emerson has already requisitioned an EGM to remove the three independent executive directors from the board and replace them with its own appointees.

Despite yesterday's unusually public display of huffing and puffing from fund managers, the answer seems to be that there is very little they can do. Emerson is fully within its rights. The brutal but simple fact is that, having taken control of Astec through an asset swap back in 1989, Emerson can pretty much do whatever it likes.

If Emerson is obeying the letter of the law, however, it is hardly observing the spirit. For eight years, the relationship between Emerson, Astec and its remaining shareholders was a happy one. And when Emerson quietly lifted its holding above 50 per cent last year it was quick to reassure everyone that nothing had changed. So when Emerson told Astec's independent directors to accept an offer at the prevailing market price of 111p or else, it's not hard to see why the City's normally discreet fund managers felt hard done by.

If Emerson does not back off, the next step is legal action. Apparently, section 459 of the Companies Act is designed to protect minority shareholders from "unfair prejudice" but no one knows whether it will work in this case. Of course, the happiest conclusion for all concerned would be if Emerson coughed up a decent premium, say 140p a share, and permit everyone to go home with honour intact. In the meantime, the old rule of caveat emptor applies. If you invest in a company where the controlling shareholder suddenly decides to play hardball, you can't count on the old British sense of decency and fair play to protect you.

Start your day with The Independent, sign up for daily news emails
News
newsAnother week, another dress controversy on the internet
Life and Style
Scientist have developed a test which predicts whether you'll live for another ten years
health
Life and Style
Marie had fake ID, in the name of Johanna Koch, after she evaded capture by the Nazis in wartime Berlin
historyOne woman's secret life as a Jew in wartime Berlin
News
news... and what your reaction to the creatures above says about you
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: A Customer Service Advisor is r...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Day In a Page

Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot
Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

Poldark star Heida Reed

'I don't think a single bodice gets ripped'
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn