Steel Won’t Take Supreme Court No For An Answer

Aug 8 2007 | 12:53pm ET

Give Walter Lichtenstein this much: His persistence is not broken by even the longest of odds.

Just a day after Japan’s highest court rejected his Steel Partners’ bid to block condiment-maker Bull-Dog Sauce Co.’s poison pill provision, affirming a lower court decision that branded the activist hedge fund an “abusive” bidder, Steel announced that it would move ahead with its bid, altering it to fit the new circumstances.

Steel is still offering roughly US$260 million for the august Japanese company. But as the poison pill will quadruple the number of Bull-Dog shares, Steel slashed its per-share offer price by three-quarters, from ¥1,700 to ¥425. It also extended the expiration date of its offer by two weeks; Bull-Dog investors now have until Aug. 23 to accept Steel’s offer to make Bull-Dog the first successful hostile takeover in Japanese history.

But there’s almost no chance of that happening. All Bull-Dog shareholders will receive three warrants for the new shares. All except Steel, of course; Bull-Dog plans to buy Steel’s acquisition rights, effectively cutting Steel’s stake in the company from more than 10% to about 3%. Even with a full complement of new shares, Steel’s hopes were marginal, with 80% of Bull-Dog shareholders backing the poison pill in June, in spite of a precipitous drop in Bull-Dog’s share price and the fact that buying Steel’s acquisition rights will send Bull-Dog into the red by almost ¥1 billion this fiscal year. And Steel’s tactics continue to take their toll: Trading in Bull-Dog shares had to be suspended for a time today on the Tokyo Stock Exchange after Steel announced it was pressing on.

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