HONG KONG (Reuters) - A majority of Yingde Gases Group’s 2168.HK shareholders voted to keep two of its co-founders and main shareholders on its board and oust five other board members, ending a four-month battle for control of the $1.5 billion company.
Amid the power struggle, China’s largest industrial gases company is in play, with U.S. industrial gas maker Air Products (APD.N) making a takeover approach, and Hong Kong-based private equity firm PAG agreeing to buy a substantial stake.
Most shareholders at two separate extraordinary general meetings (EGM) voted on Wednesday to keep Sun Zhongguo and Trevor Strutt on the board of directors, while ousting another co-founder and major shareholder, Zhao Xiangti, and four other directors, Yingde said in a securities filing.
Shareholders also appointed former Yingde employee Zhihe Mah to the board, but voted against a measure to reduce the board to five people from nine.
The decision leaves four vacant board positions that could be filled by minority shareholders, including Hong Kong-based activist hedge fund Oasis Management Company Ltd, which said last week it would seek a seat as the company considers strategic alternatives, including an outright sale.
Yingde said it will try to fill the vacant posts “as soon as possible” within a period of three months.
Sun and Strutt, previously the Chairman/CEO and COO of Yingde, respectively, were relieved from their executive posts at a November board meeting that named Zhao chairman of Yingde. The two have since been in a legal fight to get reinstated.
The two were removed after “poor corporate management” and “unsatisfactory performance” in past years, according to a letter from the majority of Yingde’s board filed ahead of the EGM.
In December, following the ouster of Sun and Strutt, asset manager StellarS Capital (Hong Kong) Ltd and Air Products made takeover approaches for Yingde, offering about $1.1 billion and as much as $1.5 billion in cash, respectively.
The takeover battle took another twist last week when PAG agreed to buy the combined 42.1 percent stake of Zhao, Sun and Strutt for $616 million. PAG’s offer came just two days after Oasis, a minority investor in Yingde, unveiled its shareholding in the company and plans to seek a board seat.
Yingde hired Morgan Stanley to advise on offers it received from Air Products and StellarS Capital. Air Products offered as much as HK$6 per share in cash for Yingde shares, while StellarS indicative offer was for HK$4.5 per share, but neither was binding.
PAG also offered HK$6 a share, but its agreement will be suspended if there’s a competing offer at least 5 percent higher than PAG‘s, or equivalent to HK$6.3 per share. Yingde’s shares closed at HK$6.38 on Wednesday, indicating investors expect a competing bid to emerge.
Besides Oasis, which owns a 4.5 percent stake in Yingde, other minority investors that could benefit from the battle for control of the company include Aberdeen Asset Management, BlackRock Inc, Vanguard and UBS, according to Hong Kong stock exchange data.
Yingde has also formed an independent board committee to consider the offers, hire an independent financial adviser and make a recommendation on the different proposals.
Reporting by Elzio Barreto; Editing by Muralikumar Anantharaman and Richard Pullin