Sapporo Rejects Takeover Proposal By Steel Partners

Tokyo, Feb. 26 (Jiji Press)–Sapporo Holdings Ltd. on Tuesday rejected a proposed takeover by U.S. investment fund Steel Partners Japan Strategic Fund (Offshore) LP.

The board of Sapporo Holdings concluded that the proposed acquisition is highly likely to cause serious damage to the interests of Sapporo’s general shareholders.

At a news conference, Sapporo Holdings President Takao Murakami said, “It is likely Steel Partners will pursue only profits without taking responsible action as a shareholder with a controlling stake.”

In February last year, Steel Partners, Sapporo’s top shareholder, proposed raising its equity stake from some 18 pct to 66.6 pct by buying additional shares through a takeover bid.

After one year of internal talks, Sapporo’s board concluded that Steel Partners failed to show a clear intention to participate in the management of the company.

The board is still suspicious as to what action Steel Partners would take following such an acquisition, said the holding company of the beer-making group.

Earlier this month, a Sapporo special panel to address tender offer proposals reached a similar conclusion, suggesting Steel Partners’ acquisition would run counter to the interests of general shareholders.

Now that Sapporo has been given the backing from the panel, conditions for invoking its takeover defense measures have been almost met.

Sapporo only needs to wait for the launch of the takeover bid before starting defense measures.

Meanwhile, Steel Partners is unlikely to back down. The U.S. fund presented its own proposals to improve Sapporo’s corporate value, in response to harsh criticism over its failure to present ideas about how to improve acquired companies.

In a high court ruling on a tender offer plan for Bull-Dog Sauce Co. in July last year, Steel Partners was branded as an abusive corporate buyer. The U.S. fund subsequently gave up on the plan.

This time, Steel Partners could either ignore Sapporo’s rejection and launch its hostile takeover bid or express its opposition to the appointment of the current management team at a general meeting of shareholders in late March.

If Sapporo and Steel Partners bring their dispute to court, it is uncertain which side will win, said Nomura Securities Co. senior strategist Kengo Nishiyama.

Steel Partners has met requests from Sapporo’s management by presenting its own proposals for business improvement, Nishiyama added.END

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