A shareholder meeting descended into farceon Monday when a US hedge fund refused to vote on its own proposal to split-up ASMI, the Dutch semiconductor company.
Mellon HBV Alternative Strategies, which owns 7.8 per cent of ASMI and is the company's third-largest shareholder, said it would "withhold its vote" because it wanted more time to consider "concessions" unveiled by management last Friday, which it said had caught shareholders by surprise.
The vote went ahead and the Mellon motion was lost, with more than 21m votes against and 11.3m in favour of the break-up.
The fund accused management of "seeking a confrontation" and said it "seriously objected" to the decision to take the vote. "We won't agree with the outcome whatever that might be," the fund said.
On Friday ASMI said it would amend ASMI's dividend policy and provide greater financial transparency. Its boards also agreed to "periodically review strategy". Mellon said those moves were "a step in the right direction" but it had wanted time to consider the potential impact of the measures.
Arthur del Prado, ASMI chief executive, said "activist investors" should "leave us alone".
"Don't bother us with all this stuff with activism, because - although we are listening to the shareholders - we should now go back to work," he said.
ASMI comprises a "front-end" loss-making chip-production equipment maker. It also has a 54 per cent stake in a subsidiary ASM Pacific Technology - the "back-end” unit which has testing and packaging chip production operations and is profitable.
Mr del Prado said ASMI was "beginning to reap the rewards" of investment in the loss-making operations, although he conceded there was still "much to improve". He said operating margins would be in line with its peers by 2009.
He told shareholders: "The shareholders who are challenging ASMI should understand that it is goal number one to turn this company into a very profitable front-end operation in addition to the very productive and leading back-end operation in Far East. If you are really long-term participants in this company then stand back and wait til 2008/09 when these results come through."
Mellon vowed to press on with its call for action to improve the valuation of the company. It has argued that "only the structural solution of a split would solve the significant valuation gap that exists [between the two ASMI units]".
