Japan: Sapporo urged to vote against company takeover defense plan

Influential proxy advisory firm Institutional Shareholder Services Inc. said on Thursday it urged shareholders in Japanese brewer Sapporo Holdings Ltd. to vote against the company's defense against hostile takeovers, Reuters reported March 15.

ISS's recommendation comes one day after Glass Lewis, another proxy advisory firm, also advised shareholders to vote against Sapporo's defense scheme.

U.S. hedge fund Steel Partners in January proposed that Sapporo abolish its scheme which allows the brewer to issue equity warrants if an unwanted bidder buys 20 percent of its stock.

Steel Partners, run by Warren Lichtenstein, said in February it may launch a tender offer to raise its stake in Sapporo to two-thirds from 18.6 percent.

A showdown is expected on March 29 when Sapporo is slated to ask shareholders to approve the scheme at a general meeting.

As a reason for rejecting the proposal, ISS cited a lack of accountability among members of the committee charged with administering the defense.

"Committee members, who hold no other posts at Sapporo, are not elected by shareholders and are not subject to a shareholder lawsuit should they act in an inappropriate manner," ISS was quoted as saying in a statement released by Steel Partners.

ISS also noted that the company's board of directors, all but one of whom are insiders under ISS's standard classification system, can override decisions made by the defense committee even though the company's board lacks enough independent members to do so in the best interests of all shareholders.

"We are concerned that the committee's decision could still be overruled by a board of directors which will include only one independent outsider," ISS said in Steel Partners' release.

However, an ISS executive told Reuters its opposition to Sapporo's poison pill was not an endorsement of Steel Partners' proposed tender offer.

"We have several concerns with Steel's proposal as submitted in its letter to the company, but no tender offer has been launched, and it would be premature for ISS to make any recommendation at this time," said Marc Goldstein, representative director of ISS Japan.

ISS provides voting advisory and research services on more than 35,000 public companies in 115 markets to more than 1,700 institutional investors and money managers globally.

Sapporo shares closed 0.4 percent lower at 840 yen, 1.8 percent above Steel Partners' offer price of 825 yen apiece.

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