Beleaguered minority shareholders in Astec (BSR) Plc, the power conversion products group, will be in court today (Monday) for the first stage of their anti-bullying case against US majority shareholder Emerson Electric Co. In an all day hearing, which will break new ground in UK company law, a judge will rule whether Astec’s 51.1% share holder, Emerson, has a case to answer regarding its recent bad behavior. They have behaved as if they own the whole company, said Nick Ross, a representative from minority shareholders Electra Fleming. Emerson, having acquired a controlling interest, proceeded to fire the majority of Astec’s board last month, while also refusing to pay a premium to minority stock holders for their stake. This, combined with other contentious activities, has proved too much for institutional shareholders, including Electra Fleming and Royal & Sun Alliance, forcing them to resort to the courts. A group of six institutions will fund the action which could prove to be long and extremely costly. The minorities are claiming unfair prejudice under Section 459 of the Companies Act, while Emerson, an electronics group based in Missouri, will seek to have the case struck out. Existing legislation is designed to prevent the interests of a minority from being trampled by a majority shareholder’s extensive voting rights. Some legal precedent exists in this area from past cases, according to Mr Ross, but there is nothing directly comparable. The plaintiffs will present as further evidence, written statements from the deposed board members detailing Emerson’s heavy handed tactics. Nobody at Emerson was available for comment on the matter.
