Japan: Sapporo Holdings try to block hostile takeover attempt

Sapporo Holdings, Japan's third-largest beer maker, hired Nikko Citigroup and Mizuho Securities to help it block a takeover attempt by Warren Lichtenstein's Steel Partners Japan Strategic Fund, International Herald Tribune published March 27.

Nikko Citigroup and Mizuho Securities will provide the brewer with advice should Steel Partners, which owns a 17.52 percent stake, make a hostile bid, a Sapporo spokesman, Katsuhito Ogawa, said Tuesday. The U.S. investment fund is seeking 66.6 percent of the brewer's voting rights.

The beer maker last year introduced anti-takeover measures that allow it to dilute its stock, making the shares more expensive, to rebuff a hostile bid. Sapporo shareholders will vote on March 29 on the defensive system, with Steel Partners urging investors to reject it.

"Nikko Citigroup might be able to provide some more defense ideas given their global perspective," said Doug Scott, an analyst at KBC Securities in Tokyo who rates Sapporo "hold." "They may be able to add to the knowledge that Mizuho has for Sapporo's defense."

Shares of Sapporo, which makes Yebisu beer and distributes Guinness stout and the Yellow Tail and Beringer wine brands in Japan, are now trading above Steel Partner's February offer price of 825 yen a share. The stock closed Tuesday at ¥841 or $7.11.

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Sapporo's net profit dropped 36 percent in the year ended Dec. 31 on falling sales. The company is in the second year of a three-year business improvement plan, which will cut ¥10 billion of expenses and invest ¥70 billion in facilities.

Sapporo has 25 subsidiaries and 14 affiliates that sell beer, wine and brandy. It also runs bars and restaurants in Japan and has real estate holdings.

Japanese media reported last month that Sapporo may form an alliance with its larger rival, Asahi Breweries, to help fight the takeover bid. A Sapporo spokesman, Tatsuya Komatsu, denied the reports.

Asahi and Sapporo, who compete for the same customers in Japan's shrinking beer market, were created from the split of the same parent, the former DaiNippon Beer, in 1949.

The anti-takeover plan allows Sapporo up to 90 days to consider a bidder's takeover proposal. If the bidder fails to follow its rules, Sapporo can implement the defensive measures.

The company's defense plan allows it to issue one new share for every existing share at a price of ¥1 or more per share, which would allow Sapporo to dilute the stock held by any outside bidder. Sapporo shortened the period in which it can dilute its stock to 10 days from 25 days in November, by registering warrants it could issue in the event of a hostile takeover.

Yamaha Motor became the first Japanese motorcycle maker to introduce anti-takeover measures before the country implements new acquisition rules in May.

Yamaha Motor shareholders approved a plan for Yamaha to issue new shares to dilute the holdings of a hostile bidder, the company said Tuesday.

Japanese companies, including Yamaha Motor, are increasingly making use of anti-takeover measures to fend off hostile bids from buyout funds. Starting May 1, the Japanese government will allow overseas companies to acquire Japanese corporations through a local subsidiary using the parent company's shares.

Under Yamaha Motor's anti-takeover measures, any investor who buys at least a 20 percent stake in Yamaha will be required to submit a proposal for a takeover. An advisory panel made up of non-Yamaha Motor members will review the plan within 90 days to judge whether the buyer will damage Yamaha's corporate value.

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