Japanese Union Opposition to Hedge Fund Takeover Bid for Sapporo Breweries
Unions representing workers at Japan's Sapporo Holdings (which includes Sapporo Breweries and Sapporo Beverages) have declared their opposition to the recent takeover bid by the hedge fund Steel Partners.
Steel Partners last February sought to raise its 19% stake in Sapporo to 66% and has been aggressively pushing for greater "shareholder value", prompting the board to adopt a "poison pill" defense in 2007. On February 28 this year, Sapporo management officially rejected the fund's takeover bid. Steel Partners has since modified its strategy in an apparent bid to maintain pressure and keep negotiations going, lowering its target to 33.3% - just shy of the 33.4% needed to veto some management decisions at shareholder meetings.
Supported by Food Rengo, the Sapporo Group Union Council on March 6 issued a public statement affirming their strong opposition to the takeover move. Citing the national center Rengo’s views on “policy issue and measures on hedge funds and private equity funds” the unions condemned Steel Partner's focus on short -term profits at the expense of the company's long-term development and highlighted the negative implications for employment security and industrial relations.
Sapporo is not the first Japanese company to attract pressure from Steel Partners. The fund has aggressively invested in dozens of listed companies using hostile takeover bids to extract increased dividends and boost share prices. In 2003, Steel Partners launched a hostile takeover bid for Yushiro Chemical Industry, which increased its dividend by a factor of 14 and spent the equivalent of three years profit to block the takeover. Steel Partners profited enormously when it sold its shares.
In September 2006, Steel Partners used its minority stake to launch a hostile takeover bid for Myojo Foods, spurring Nissin Food Products to buy a 33.4 stake in Myojo to block the takeover. The takeover failed, but Steel Partners earned over 3 billion yen in sales of Myojo stock - after which it increased its stake in Nissin Foods to over 10%. Steel Partners then launched a takeover bid for Bulldog Sauces, where it ultimately lost a legal challenge to the company's poison pill defense measures (reported on this site on July 9, 2007).