Spurred by a rancorous battle for control waged by Steel Partners' activist hedge fund and Bull-Dog Sauce Co., the government plans to revise guidelines on corporate defenses against hostile takeovers, an official said Thursday.
"We must re-examine the guidelines as soon as possible, most likely starting this fall," said Hiroaki Niihara, a director at the Ministry of Economy, Trade and Industry.
Niihara protested a court decision to uphold Bull-Dog's measures to repel a hostile takeover by Warren Lichtenstein's Steel Partners fund. Bull-Dog paid Steel Partners ¥2.3 billion in cash in exchange for having its stake diluted by two-thirds — four times the company's net income in the latest fiscal year.
The court decision practically "authorized greenmailing activities," Niihara said at a Japan Corporate Restructuring IQ seminar in Tokyo. "It's clear that something must be done."
Bull-Dog, a Tokyo-based condiments maker, allowed all shareholders except Steel Partners to convert warrants it issued into common shares, a move that cut the fund's stake to less than 3 percent from 10 percent. Other stockholders voted in favor of the decision.
Steel Partners appealed the outcome, only to lose in both the Tokyo High Court and the Supreme Court. The Tokyo court labeled the fund an "abusive acquirer."
The government issued guidelines in 2005 on implementing antitakeover defenses. It discouraged issuance of stock warrants that benefit only a handful of shareholders, such as top executives. The guidelines also seek to prevent defensive measures taken solely to protect managers' interests.