Identifier
Created
Classification
Origin
08TOKYO546
2008-02-29 09:36:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Tokyo
Cable title:
SAPPORO REJECTS STEEL PARTNERS TAKEOVER BID
VZCZCXRO0912 OO RUEHFK RUEHKSO DE RUEHKO #0546 0600936 ZNR UUUUU ZZH O 290936Z FEB 08 FM AMEMBASSY TOKYO TO RUEHC/SECSTATE WASHDC IMMEDIATE 2153 INFO RUEHBJ/AMEMBASSY BEIJING 1962 RUEHFR/AMEMBASSY PARIS 6002 RUEHUL/AMEMBASSY SEOUL 8024 RUEHFK/AMCONSUL FUKUOKA 6396 RUEHHK/AMCONSUL HONG KONG 6460 RUEHOK/AMCONSUL OSAKA KOBE 0064 RUEHKSO/AMCONSUL SAPPORO 7001 RUEHBS/USEU BRUSSELS RUEHGV/USMISSION GENEVA 3260 RUEHIN/AIT TAIPEI 6912 RUCPDOC/DEPT OF COMMERCE WASHINGTON DC RUEATRS/TREASURY DEPT WASHDC RUEAWJA/JUSTICE DEPT WASHDC
UNCLAS TOKYO 000546
SIPDIS
SENSITIVE
SIPDIS
DEPT FOR EAP/AMBASSADOR HASLACH
ALSO FOR EAP/J AND EEB/IFD/OIA/KAMBARA
DEPT PASS USTR FOR BEEMAN
USDOC FOR 4410/ITA/MAC/OJ/NMELCHER
JUSTICE FOR ANTITRUST DIVISION - CHEMTOB
TREASURY DEPT FOR IA/CARNES AND POGGI
GENEVA FOR USTR
E.O. 12958: N/A
TAGS: EINV ECON OECD JA
SUBJECT: SAPPORO REJECTS STEEL PARTNERS TAKEOVER BID
REF: A. TOKYO 324
B. TOKYO 408
Sensitive but Unclassified. Contains Proprietary Information
UNCLAS TOKYO 000546
SIPDIS
SENSITIVE
SIPDIS
DEPT FOR EAP/AMBASSADOR HASLACH
ALSO FOR EAP/J AND EEB/IFD/OIA/KAMBARA
DEPT PASS USTR FOR BEEMAN
USDOC FOR 4410/ITA/MAC/OJ/NMELCHER
JUSTICE FOR ANTITRUST DIVISION - CHEMTOB
TREASURY DEPT FOR IA/CARNES AND POGGI
GENEVA FOR USTR
E.O. 12958: N/A
TAGS: EINV ECON OECD JA
SUBJECT: SAPPORO REJECTS STEEL PARTNERS TAKEOVER BID
REF: A. TOKYO 324
B. TOKYO 408
Sensitive but Unclassified. Contains Proprietary Information
1. (U) Sapporo Holdings, Ltd.'s board of directors February
26 announced it had rejected U.S.-based investment fund Steel
Partners' $1.4 billion tender offer to acquire 66.6 percent
of the company's shares. The board's announcement did not
signal whether the company intended to implement formal
takeover defense measures to dilute Steel's 19 percent stake
in the company, Japan's third-largest beer and beverage
maker. Sapporo's board based its decision on a February 5
report by a company-appointed advisory committee that
concluded Steel's offer was "not in the best interests of the
company or its shareholders" (Ref A). Sapporo's shares were
trading February 29 around 800 yen, three percent below
Steel's bid of 825 yen per share.
2. (SBU) Steel Partners has not yet responded publicly to
the board's announcement, but the fund had been clearly
angered by the advisory committee's report, which claimed
Steel had not provided sufficient information about its plans
for the company after acquiring control. The report also
charged the fund with secretly planning a two-stage "squeeze
out" takeover that could result in financial damage to
minority shareholders. A February 13 letter from Steel's
Managing Partner to the Sapporo advisory committee refuted
the charges by noting that Steel, at Sapporo's request, had
submitted in December 2007 a 125-page plan on how to enhance
the firm's corporate value that set out Steel's long-term
strategic vision for the company. The letter also reminded
the committee the fund had given repeated written assurances
that, if it decided to go ahead with a bid for the entire
company, it would offer the remaining shareholders a price no
less favorable than its current bid. One of Steel Partners'
executives told Econff February 23 that the fund believes
Sapporo never intended to negotiate seriously with Steel and
was only using its "advance warning system" defense as a
delaying tactic.
3. (SBU) Unless Sapporo takes measures that dilute Steel's
shareholdings, the fund's legal options seem limited. In our
view, if it wishes to pursue the takeover bid, it would
probably need to seek support directly from shareholders by
means of a proxy fight before the company's June annual
general meeting.
SCHIEFFER
SIPDIS
SENSITIVE
SIPDIS
DEPT FOR EAP/AMBASSADOR HASLACH
ALSO FOR EAP/J AND EEB/IFD/OIA/KAMBARA
DEPT PASS USTR FOR BEEMAN
USDOC FOR 4410/ITA/MAC/OJ/NMELCHER
JUSTICE FOR ANTITRUST DIVISION - CHEMTOB
TREASURY DEPT FOR IA/CARNES AND POGGI
GENEVA FOR USTR
E.O. 12958: N/A
TAGS: EINV ECON OECD JA
SUBJECT: SAPPORO REJECTS STEEL PARTNERS TAKEOVER BID
REF: A. TOKYO 324
B. TOKYO 408
Sensitive but Unclassified. Contains Proprietary Information
1. (U) Sapporo Holdings, Ltd.'s board of directors February
26 announced it had rejected U.S.-based investment fund Steel
Partners' $1.4 billion tender offer to acquire 66.6 percent
of the company's shares. The board's announcement did not
signal whether the company intended to implement formal
takeover defense measures to dilute Steel's 19 percent stake
in the company, Japan's third-largest beer and beverage
maker. Sapporo's board based its decision on a February 5
report by a company-appointed advisory committee that
concluded Steel's offer was "not in the best interests of the
company or its shareholders" (Ref A). Sapporo's shares were
trading February 29 around 800 yen, three percent below
Steel's bid of 825 yen per share.
2. (SBU) Steel Partners has not yet responded publicly to
the board's announcement, but the fund had been clearly
angered by the advisory committee's report, which claimed
Steel had not provided sufficient information about its plans
for the company after acquiring control. The report also
charged the fund with secretly planning a two-stage "squeeze
out" takeover that could result in financial damage to
minority shareholders. A February 13 letter from Steel's
Managing Partner to the Sapporo advisory committee refuted
the charges by noting that Steel, at Sapporo's request, had
submitted in December 2007 a 125-page plan on how to enhance
the firm's corporate value that set out Steel's long-term
strategic vision for the company. The letter also reminded
the committee the fund had given repeated written assurances
that, if it decided to go ahead with a bid for the entire
company, it would offer the remaining shareholders a price no
less favorable than its current bid. One of Steel Partners'
executives told Econff February 23 that the fund believes
Sapporo never intended to negotiate seriously with Steel and
was only using its "advance warning system" defense as a
delaying tactic.
3. (SBU) Unless Sapporo takes measures that dilute Steel's
shareholdings, the fund's legal options seem limited. In our
view, if it wishes to pursue the takeover bid, it would
probably need to seek support directly from shareholders by
means of a proxy fight before the company's June annual
general meeting.
SCHIEFFER