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More on Steel Partners, Sapporo and Hostile Takeovers in Japan

On March 30 we reported on the ‘Advance Warning System’ for takeovers that had been approved by the shareholders of Sapporo Breweries. After being reported by the major news media, the story hasn’t really picked up much in the way of analysis, which is surprising given its position within the current state of the Japanese economy - especially when the cover of last week’s edition of Newsweek Japan depicted the Japanese flag, with its red sun surrounded by various domestic brand logos, being sucked into a hole.

The headline to the featured story read 「ファンド嫌いで沈むニッポン」, or, “Nippon Sinking in Fund Phobia,” and showed a cartoon of an American businessman entertaining a range of global clients, while a nervous looking gentleman wearing a necktie with the Hinomaru emblazoned on it looks on from a distance.

The story is obviously on the minds of people in Japan. One blog that has picked up on it is the new Japan Law Blog, written by Mr Joe Jones, who puts an interesting legal angle on the whole Sapporo/Steel Partners case:

Steel Partners has already argued that the terms of the warning system are completely unreasonable and that the defenses available to the board will completely prevent any takeover bid against Sapporo. Of course, if Steel Partners has to go to court they will stand a good chance of losing their bid anyway, simply because of all the delay…The history of hostile takeovers in Japan is mostly marked by failures, and those failures have more to do with such business tactics than with legal issues.

I must say I agree here. I had an opportunity to have a conversation with someone who does Organizational Development consulting here in Tokyo, and this issue came up. We were in pretty clear agreement that the approach made by Steel Partners left us scratching our heads, not least because it seems to be a tried-and-true path to failure, and because the approach from “Rationality and Legality” isn’t much of a match for the “Barbarians at the Gates” play on emotions and insecurities that the board of directors never even tried to disguise.

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