Steel Partners Stymied In Japan

Aug 7 2007 | 1:48pm ET

The sun is setting on activist hedge fund Steel Partner’s battle with a Worcestershire sauce maker in the land of the rising sun.

Japan’s highest court has rejected Steel’s attempt to prevent Bull-Dog Sauce Co. from implementing its poison pill, which will effectively slash Steel’s stake in the company from10% to 3% and put an end to its $260 million takeover bid, Reuters reports.

The Supreme Court of Japan upheld a lower court ruling that corporate management is allowed to discriminate against some shareholders, so long as it has a rational reason for doing so—and characterized the hedge fund as an abusive bidder, to boot. Steel said it would issue a statement tomorrow.

Victory, however, may not be so sweet for Bull-Dog: To defeat the bid, the company will have to issue acquisition rights to all shareholders—who approved the poison pill defense—and buy Steel Partner’s acquisition rights. The company was forced to revise its net forecast for the year ending March 2008 in a big way: It swung from a ¥500 million (US$4.2 million) profit to a ¥980 million (US$8.3 million) loss, due to the buyback.


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