Lucas's US move vote goes down to the wire

THE VOTE on LucasVarity's controversial plan to move its headquarters and stock market listing to the US turned into a dramatic cliffhanger last night, with the car parts and aerospace group admitting that the outcome was too close to call.

The company was understood to have cleared one hurdle by winning a simple majority of shareholders who voted.

But under the complex ballot rules, the company, led by the chief executive Victor Rice, needs to win the backing of investors holding at least 75 per cent of the company. This part of the vote was set to go right to the wire even though around 60 per cent of the shares are in the hands of US investors - widely expected to be in favour of Mr Rice's proposal.

A number of UK institutions, including Schroders, Legal & General and Standard Life, have voted against the move. They control around 15 per cent of the company and need a further 10 per cent to block the move.

Mercury Asset Management, with around 4 per cent, is understood to have voted in favour. Sources close to the company said the vote was so finely- balanced that the outcome would probably not be known until later today. The vote came at the end of a stormy shareholders' meeting where angry investors accused the board of "manipulation and greed" and of betraying the spirit of the 1996 merger between Lucas Industries and Varity of the US.

Mr Rice and the chairman Ed Wallis vigorously defended the plan telling the meeting in the City of London that a move to the US would enable Lucas to raise capital for acquisitions more cheaply than in the UK and to compete more effectively with its US rivals.

They also said that a US stock market listing could boost LucasVarity's depressed share price by up to 30 per cent due to the better rating of engineering companies in Wall Street.

Maurice Mistovski, one of around 120 small shareholders who attended the meeting, said: "[The move] reeks of manipulation and greed. What benefit is there for me if you domicile the company in the US. This is blatant under-hand manipulation."

Mr Wallis declined to answer the remarks. Other shareholders, including former chairman Sir Anthony Gill, accused the board of betraying an undertaking given at the time of the merger not to move to the US.

However, Mr Wallis said that he did not recall that there had been an "absolute promise" not to move to the US.

He said that "circumstances have changed" since the merger because the majority stake in Lucas had shifted from UK shareholders to US investors.

Several small investors complained that the company had decided that holders of American Depository Receipts (US listed shares), who did not vote, counted as those in favour of the move. Mr Rice said that this was normal practice but that the board would ask ADR holders about their voting intention and change the outcome of the vote if it found that those who abstained were against the move.