Bull-Dog activates poison pill plan

Kyodo News

Bull-Dog Sauce Co. exercised Japan’s first poison pill defense Wednesday to dilute the stake of Steel Partners, which has launched an unwelcome bid to take over the sauce maker.

Bull-Dog began procedures to issue three equity warrants for each Bull-Dog share to existing shareholders in hopes of reducing the U.S. investment fund’s stake to 2.86 percent from 10.52 percent.

Steel Partners Japan Strategic Fund (Offshore) L.P., Bull-Dog’s top shareholder, launched an unsolicited tender offer for the Japanese company May 18 to try to acquire all of its outstanding shares. The tender offer continues.

The equity warrants will be exchanged for new shares in the Worcester sauce maker as early as July 27.

Under the defense system, Steel Partners will be refused the right to convert the equity warrants into new Bull-Dog shares. Instead, Bull-Dog will buy the warrants back in cash from Steel Partners for 396 yen per warrant, or a total of 2.3 billion yen.

Steel Partners argues that the defense system, commonly known as a “poison pill,” is discriminatory against the fund, and has appealed the latest ruling by Japanese judicial authorities to the Supreme Court. The latest ruling is in favor of Bull-Dog’s issuance of equity warrants to foil a takeover attempt by the U.S. hedge fund.

The Tokyo High Court said Monday that Bull-Dog’s takeover defense step, endorsed by more than 80 percent of its shareholders at their annual meeting late last month, will not run counter to the principle of shareholder equality.

Steel Partners, headquartered in New York, is one of the most famous funds in Japan, viewed as representing a rise in shareholder activism after carrying out a series of unwanted buyout bids for undervalued Japanese firms and pushing for higher dividends.

Steel Partners has invested a total of about $4 billion in more than 30 Japanese companies, ranging from a wigmaker and a brewer to a manufacturer of circular saws.