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Sapporo Holdings Ltd. shareholders Thursday voted two-thirds in favor of the company’s proposed takeover defense measures.

The move, which will make any takeover of Sapporo much more expensive, now puts the ball in the court of Steel Partners Japan Strategic Fund (Offshore) L.P., the U.S. investment fund bidding for a controlling stake in the nation’s third-largest brewery.

“We have gained support from many of our shareholders,” Sapporo President Takao Murakami said confidently at a news conference after the annual general shareholders’ meeting. “This shows that our passions for contributing to Japan’s traditional food culture through our beer products were well received by the shareholders.”

Steel Partners, Sapporo’s largest shareholder, said in a statement that the decision was regrettable but did not say it would proceed with the bid.

“It is regrettable that the advance warning policy for takeover bids proposed by the company was approved, but we appreciate that many shareholders supported us,” the fund said.

The nearly three-hour meeting in Tokyo was closed to the media but attended by 1,157 shareholders. A Steel Partners delegate urged the shareholders to vote against the new takeover defense measures, and five other shareholders made statements or asked questions about the measures, according to Sapporo.

In mid-February, Steel Partners said it would launch a tender offer to raise its stake to 66.6 percent from about 18 percent if Sapporo’s board of directors approved the move.

The board, which has not yet accepted the buyout offer, is waiting for Steel Partners to respond to its request for details on the buyout plan.

Sapporo is concerned the fund will launch a hostile takeover bid if the brewery rejects the proposal. The company adopted antitakeover measures in February 2006 but bypassed shareholders in the process — a point that may work against it if a legal battle is launched to dispute it.

The measures adopted Thursday are basically the same as the previous ones, allowing the company to issue new shares to shareholders other than the bidder to dilute the bidder’s stake and make the acquisition more difficult.

Even with shareholder approval of the new defenses, Sapporo said it would use old antitakeover measures in dealing with Steel Partners because the new one cannot be applied retroactive to the bid, which was launched in February.

Kazusada Hirose, a senior analyst at Moody’s Japan K.K., said shareholders’ approval for the new measures would still help Sapporo in any legal battles.

“The shareholders approved the new defense measures that are almost the same as the old ones, and that means they also endorsed the old ones,” Hirose said.

Hirose said he believes Steel Partners is essentially waiting for the appearance of a white knight to buy its stake, adding that the U.S. fund is now trapped because none of Sapporo’s domestic rivals has come forward to help Sapporo.

“I think both Steel Partners and Sapporo are stuck” and are playing a waiting game, Hirose said.

Prior to the shareholders’ meeting, Steel Partners and Sapporo management were locked in a tug-of-war for shareholder support.

Earlier this month, Steel Partners sent two letters to shareholders asking them to reject the new takeover defenses.

“Sapporo is a company with a long history and I hope the company will maintain the taste of its beer,” Sapporo shareholder Ryoji Matsuzaki, 74, said Thursday morning before the meeting.

But at the same time, Matsuzaki said the emergence of investment funds like Steel Partners provides a good opportunity for executives to review their management policies and their relationship with shareholders. He was not clear on whether he supported the antitakeover defenses.

Another shareholder, a 70-year-old man from Suginami Ward, Tokyo, who declined to be named, said he would vote in favor of the measures.

“Sapporo was targeted because it is not doing enough to improve corporate value,” he said. “But I don’t support (Steel Partners.) The fund won’t be able to turn around (Sapporo) because it has no business expertise in the industry.”

Sapporo’s stock price — which had risen to 960 yen since the fund announced the buyout proposal — ended Thursday at 828 yen, down 3 yen from the previous day.

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