Shareholders ask China's Hollysys to set special meeting amid takeover frustration

By Svea Herbst-Bayliss

NEW YORK(Reuters) - Shareholders in China's Hollysys Automation Technologies owning a total 32.2% of the automation control system maker's shares asked the board of directors to set a special shareholder meeting, according to a letter seen by Reuters.

Asking for a special meeting is a highly unusual step and signals shareholders' mounting frustration with management of the U.S.-listed company, which has received takeover bids but which has not started a sales process, people familiar with the matter said.

The letter was sent to the company on behalf of 33 investors, including hedge funds Oasis Management and Maso Capital, by law firm Conyers Dill & Pearman on Aug. 23.

"We trust that the board of directors of the Company are taking the appropriate steps to duly convene a meeting of the shareholders of the Company to consider the matters set out in the member's business notice without delay," the letter said.

A representative for the law firm said Hollysys has not responded to the letter. Hollysys also did not respond to requests for comment for this story.

A year ago Hollysys management was ready to take the company private at a $1.8 billion valuation, Reuters reported, but nothing has happened since then.

Last week Recco Control Technology Pte. Ltd. and Dazheng Group Investment Holdings Company Limited made an all-cash offer of $25 per share, or $1.55 billion, to buy the company. The bid sent the share price up more than 10% and it traded at $18.63 early on Wednesday.

The 30-year old company, valued at $1.2 billion, operates in four sectors: industrial automation, transportation automation, medical and health care, and energy and environmental protection, and its stock has climbed 10.8 percent since January. The company is listed in the United States, incorporated in the Cayman Islands and headquartered in China.

Registered shareholders have a statutory right under section 82 of the BVI Business Companies Act (British Virgin Islands) to require the Hollysys board to convene a shareholder meeting.

Any shareholder also has a statutory right to apply to the court for an order requiring a shareholder meeting to be held on the basis that it is in the interest of the shareholders that such a meeting be held.

(Reporting by Svea Herbst-Bayliss, Editing by Louise Heavens)