Sapporo shareholders vote to keep Steel Partners at bay

by Hiroko Nakata

By a two-thirds margin, Sapporo Holdings Ltd. shareholders voted Friday to back the brewer in its ongoing struggle to avert a takeover by its largest shareholder, Steel Partners, a U.S.-based activist hedge fund.

Shareholders were unmoved by a less aggressive bid offered earlier this month by Steel Partners Japan Strategic Fund (Offshore), L.P., a unit of the U.S. hedge fund.

“We gained approval of the shareholders on basic issues, as we did last year,” Sapporo President Takao Murakami told a news conference after the annual general shareholders meeting in Tokyo earlier in the day.

Murakami said about 65 percent of the 310,405 shareholders with voting rights approved the poison pill measures, about 3 percentage points lower than a year earlier when Steel Partners launched its hostile takeover bid.

Sapporo’s poison pill strategy allows the brewer to issue equity warrants to dilute the holdings of a hostile bidder attempting to acquire a stake of 20 percent or more. Steel Partners held a stake of 17.6 percent in Sapporo as of the end of December.

On March 10, Steel Partners said it would sweeten its offer for Sapporo shares to ¥875 each in an attempt to raise its stake to 33.3 percent.

Steel Partners’ initial proposal in February 2007 was ¥825 per share to acquire a 66.6 percent stake in Sapporo.

Earlier this week, the U.S. fund sent a letter to Sapporo welcoming the board of directors’ willingness to discuss its new proposal, and asked for a meeting after Friday’s shareholders meeting.

“Since they (Steel Partners) changed their proposal, we want to confirm the details,” Murakami said. But no time for the meeting has been fixed yet, according to Sapporo.

Discussions were thought to be at an end last month when Sapporo’s board of directors turned down Steel Partners’ initial takeover proposal, citing its advisory panel’s judgment that the offer would be detrimental to the interests of its shareholders.

In general, domestic shareholders remain wary of takeover proposals made by foreign funds.

“I disagree with any takeover proposal because it gives the impression that a foreign firm is dominating a Japanese company,” Roshiji Inagaki, a 66-year-old Sapporo shareholder, said before the shareholders meeting.

“I want Sapporo executives to make efforts to improve management,” he said.