On Sunday, the shareholders of Japan's Bull-Dog Sauce approved a 'poison-pill' proposal to block the tender offer made for the company by US investors through Steel Partners Japan Strategic Fund (Offshore) LP.
The poison-pill gives all shareholders other than Steel Partners warrants to buy three new shares of the company for each share they own for a very low price. Although Steel Partners will receive a cash equivalent, its stake will fall from 10% to below 3%.
Steel Partners has applied to the Japanese court for an injunction against the poison-pill, and for a ruling that the plan contravenes Japanese law. The fund's US$260m tender offer has driven up Bull-Dog's share price by more than a quarter; but Japanese shareholders are heavily influenced by sentiment against foreign takeovers. Since changes to the law last year made it easier for foreign companies to mount takeovers in Japan, a number of likely target companies have adopted poison-pill defences.
Head of the US fund, financier Warren Lichtenstein, said: "We are disappointed
that the proposed stock acquisition rights (SARs) have been approved. We believe
this anti-takeover measure will materially harm the company's value. Such a
scheme, if allowed to be carried out, would be detrimental to the legal framework
of corporate Japan."
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