U.S. hedge fund Steel Partners pushed ahead with its $260 million bid for Bull-Dog Sauce, recasting its offer to try to bypass a 'poison pill' defense that was heavily backed by the Japanese sauce maker's shareholders.
Steel Partners slashed its bid by three-quarters to 425 yen per share from 1,700 yen, to take into account millions of new shares being issued by Bull-Dog in a defence strategy that survived a challenge by the hedge fund to Japan's highest court. The fund gave shareholders two more weeks to consider the bid.
Steel Partners faces an almost impossible task to win control of Bull-Dog, a 105-year-old maker of a Worcester sauce Japanese love to pour over pork cutlets, in what would be Japan's first successful hostile takeover.
The poison pill defence by Bull-Dog will slash Steel Partners' holding to less than 3% from a previous 10%, and the fund has still to win over other shareholders -- 80% of whom voted in June to approve the target company's defence strategy.
The poison pill will take effect on Thursday, when Bull-Dog plans to allocate new shares in exchange for stock rights it had issued to all shareholders that more than trebled the number of its outstanding shares.
However, it plans to buy back Steel Partners' stock rights rather than let the predator maintain its shareholding level.
Following the announcement by Steel Partners, the Tokyo Stock Exchange halted trading in Bull-Dog shares, which closed on Tuesday at 630 yen, well down on the year high of 1,776 yen hit mid-May in the wake of Steel Partners' launch of its tender offer.
Steel Partners has extended its offer to Aug. 23 from Aug. 10 to allow investors to mull its revised bid, although the value of the offer remains the same. It said it would accept any shares tendered, rather than set a minimum level of acceptances.
It will have to convince shareholders to ignore a Japanese court's labeling of the fund as an "abusive acquirer" - a harmful epithet in a country where maintaining harmony is often considered of paramount importance.