Battling Hedge Fund Activism Costs Target Company Millions

Nov 19 2007 | 8:04am ET

Japanese companies are batting 1.000 against activist hedge funds, but those successes can exact a heavy price.

Worcestershire sauce maker Bull-Dog Sauce Co. said Friday that it cost ¥2.1 billion (US$18.9 million) to fend off a US$260 million hostile bid from hedge fund Steel Partners.

The charge sent the company to a ¥1.93 billion (US$17.4 million) loss in the six months through September, compared to a ¥491 million (US$4.4 million) profit in the year-earlier period.

Still, Bull-Dog said it was worth it.

“We concluded that Steel Partners’ acquisition would hurt our company’s corporate value,” Director Koichi Sato said.

In August, the Supreme Court of Japan rejected Steel Partners’ bid to block Bull-Dog’s poison pill, which cut the hedge fund’s stake in the company by two-thirds by issuing new acquisition rights to existing shareholders, but buying Steel’s. At the time, Bull-Dog said the victory would result in a ¥980 million (US$8.8 million) loss for the fiscal year ending in March.


In Depth

Debunking Conventional Investment Wisdom

Feb 8 2017 | 3:22pm ET

Due diligence in the hedge fund world has long involved some combination of the...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

The Future of Private Equity: New Opportunities, New Challenges

Feb 3 2017 | 6:41pm ET

The private equity industry’s astonishing rebound since the financial crisis has...

 

From the current issue of