Japan poison pills won't stop buyouts: Steel Partners http://www.reuters.com/article/mergersNews/idUST13950820070612
Tue Jun 12, 2007
By Alison Tudor
TOKYO (Reuters) - U.S. hedge fund Steel Partners said on Tuesday that defense measures adopted by Japanese companies would not prevent successful takeovers. Steel Partners is battling the management of Bull-Dog Sauce (2804.T: Quote, Profile, Research), a Japanese maker of Worcester sauces, wig and hairpiece maker Aderans Co. (8170.T: Quote, Profile, Research) and brewer Sapporo Holdings Ltd. (2501.T: Quote, Profile, Research), all of which are threatening to adopt or have already adopted poison pills.
"Poison pills have not stopped unsolicited takeovers in the U.S. and won't stop unsolicited takeovers in Japan," said Warren Lichtenstein, chairman and chief executive of Steel Partners, Ltd. during a media briefing. "We believe that Japanese corporate law echoes our sentiment."
Over 300 Japanese companies have announced takeover defenses as of mid-May, according to a recent report by Japanese brokerage Nomura Securities. The numbers of management teams adopting such schemes has accelerated in recent months due to concerns over changes in the law designed to facilitate foreign acquisitions of Japanese companies.
Lichtenstein compared the quality of corporate governance in some of the world's most developed economies and concluded that the most frequently adopted form of poison pill in Japan -- called the advanced warning system (AWS) -- was "the worst takeover defense anywhere in the world." He said companies with poison pills in the United States typically have demonstrated poorer returns on invested capital, resulting in many of them being redeemed.
"In the United Kingdom there are no poison pills," he added.
OFFER FOR SAPPORO
Steel Partners said in February it may launch a tender offer to raise its stake in Sapporo, but as part of its defense Sapporo can ask questions about the fund's intentions. If it finds the answers are unsatisfactory Sapporo may be able to activate its poison pill.
"We plan on going through the AWS process at this point in time ... unfortunately we have no idea how long it will take because there is no real process in place nor time line. We do not control any of that." It has also launched several tender offers, including one for Bull-Dog Sauce.
"The poison pill is illegal and discriminates against shareholders," he said.
Asked if he would consider a lawsuit against a poison pill he responded: "As a shareholder we're constantly evaluating our opportunities". To date Steel Partners has $3 billion invested in corporate Japan, having taken a stake of more than 5 percent in 30 firms. For a factbox on the fund's holdings click here.
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