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JAPAN: Steel Partners calls time on upping Sapporo stake

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Steel Partners Japan Strategic Fund has finally conceded defeat in its attempts to acquire a third of Sapporo Holdings in Japan.

The hedge fund, which has been trying to up its stake in the Japanese drinks company for two years, confirmed today (17 February) that it is withdrawing its proposal to acquire 33.3% of Sapporo at JPY875 per share.

In a letter sent this week to Sapporo's president, Takao Murakami, Steel Partners said: "Over the last two years, Steel Partners has repeatedly attempted to engage in an open dialogue with the company's board of directors and to discuss and negotiate our proposal with you. At no point were you or the board willing to discuss ... an acceptable price or terms of a tender offer or other share acquisition plan.

"Unfortunately, Sapporo's performance continues to deteriorate, negatively affecting shareholders and stakeholders who have watched the company's prospects diminish and its share price drop lower and lower."

Yesterday, Sapporo's closing price was JPY422 per share.

Steel Partners' push to up its stake in Sapporo, a process the hedge fund described last July as "tedious and expensive", began in February 2007, when it looked to acquire 66.6% of the Japanese firm for JPY825 per share. In March last year, Steel Partners lowered its stake desire, to 33.3%, but upped its offer to JPY875 per share. To rebuff Steel Partners' overtures, in 2007, Sapporo introduced an 'advanced warning system' (AWS) designed to protect the company from a hostile takeover. The AWS allows the Japanese company to ask questions of any organisation which is trying to markedly up its holding in Sapporo, while also issuing new shares to dilute the bidder's stake, if it opposes the move.

Steel Partners currently holds in the region of 19% of Sapporo's shares.


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