745:"The ruling sent shudders through a foreign investing community fearful that their rights will be compromised if they seek to influence the management of Japanese companies, who have reacted with hostility to efforts by foreigners to bring American-style activism to bear to increase shareholder value."
336:
The
Supreme Court's ruling was viewed as a clear expression of preference for the District Court's ruling that the identity of the decisionmaker determines the legitimacy of a takeover defense: shareholders are generally legitimate, whereas managers are generally not. See points (2) and (5) in above
216:
allowed to discriminate against a shareholder if that shareholder possessed an "abusive motive" (濫用目的). (This language was echoed in the High Court's ruling in the Bull-Dog Sauce Case, in which the High Court found Steel
Partners to be an "abusive acquirer" (濫用的買収者); see below.) The High Court laid
163:
or "poison pill"). The Court held that such plans do not necessarily violate the principle of shareholder equality under
Japanese statutes, even if they result in discriminatory treatment some shareholders; however, such decisions must be made by shareholders themselves, acting in the company's best
345:
The
Supreme Court did not adopt the Tokyo High Court's ruling that a discriminatory stock warrant may be used because a hostile bidder is an "abusive acquirer." In reaching this ruling, the High Court had relied on the four examples of "abusive motives" given in the Nippon Broadcasting Case. See
311:
The principle of shareholder equality, as codified in
Article 109-1 of the Company Law, requires that a company treat shareholders fairly based on the type and number of shares they hold. However, if there is a risk that the acquisition of management control by a particular shareholder would harm
270:
June 7: Bull-Dog Sauce announced that it opposed the tender offer on the grounds that it could possibly harm the common interests of shareholders. At the same time, Bull-Dog Sauce's management proposed changes in the corporate charter and the issuance of stock warrants (the poison pill) at the
238:
decision is the so-called proportionality test: a takeover defense is legitimate if the takeover bid presents a threat to the company, and the defense is proportionate to the threat. The Tokyo High Court's ruling in the Nippon
Broadcasting Case (see above) has been called a "Unocal rule with
70:
Discriminatory treatment of some shareholders designed to prevent hostile takeover of a company (in this case the use of a "poison pill") does not necessarily violate the principle of shareholder equality under
Japanese statutes. Such decisions must be made by shareholders who deem it in the
315:
The question of whether the acquisition of management control by a particular shareholder harms the common interests of shareholders "should be decided by the shareholders themselves, to whom the company's interests ultimately inure, and that decision should be respected unless the general
319:
Steel
Partners had the opportunity to express its opinion at the general shareholders' meeting, and it was able to receive compensation that approximated the value of the stock warrants. As such, the stock warrants were not unreasonable or contrary to the principle of shareholder
495:(in Japanese). For a general overview of the case, see Osaki, Sadakazu, "Regulation of Japan's Capital Markets and the Battle of Control of Nippon Broadcasting System" . Nomura Capital Market Review, Vol. 8, No. 2, pp. 17-24, Summer 2005 Available at SSRN:
361:
In
November 2007, Bull-Dog Sauce estimated a consolidated net loss of 1.7 billion yen for the full year to March, largely as a result of the fight against Steel Partners. Bull-Dog's market capitalization shrank by 45%, from 32.2 billion yen in June 2007.
326:
Stock warrants that discriminate against certain shareholders with the aim of supporting the company's management or retaining control in shareholders who support said management is blatantly unfair. The present case does not meet that description,
312:
the company's interests or the common interests of shareholders, discriminatory treatment of said shareholder aimed at preventing such acquisition is not a violation of the principle of shareholder equality unless said treatment is unreasonable.
164:
interest; they cannot be made by management to protect itself. The Bull-dog Sauce case arose from the first use of a poison pill by a
Japanese company, and resulted in the Supreme Court's first ruling on the subject of takeover defenses.
187:; the fund frequently becomes the largest shareholder of a target company and then attempts a takeover or is vocally critical of the company's management. As of August 2007, Steel Partners held stakes in about 30 Japanese companies.
357:
Although the Supreme Court did not validate the Tokyo High Court's finding that Steel Partners was an "abusive acquirer," the High Court's derogatory label received significant attention in the press and the business community.
221:; (2) "scorched earth" tactics (e.g. pillaging intellectual property); (3) aiming to use the target company's assets to pay off the bidding company's debts; (4) aiming to sell off assets to produce a large one-time dividend.
316:
shareholders' meeting was procedurally unfair, the facts upon which the decision was predicated prove to be nonexistent or false, or are there is some other important fault that renders the decision unjustified."
274:
June 13: Steel Partners responded by seeking an injunction from the Tokyo District Court prohibiting the directors of Bull-Dog Sauce from passing a resolution on stock warrants and blocking issuance of the stock
592:"However, the court also made an exception when might be allowed: to fend off a would-be greenmailer—which many in Japan believe Steel Partners to be. (Steel Partners insists it doesn't engage in greenmail...."
207:
The Tokyo District Court and Tokyo High Court rulings both cited the Tokyo High Court's 2005 Nippon Broadcasting Case ruling. In that case, the High Court ruled that a board of directors was generally
234:, 493 A.2d 946 (Del. 1985) was a 1985 Delaware Supreme Court case that established standards for determining the acceptability of takeover defense tactics such as the poison pill. At the core of the
175:
Steel Partners LLC is an American hedge fund with offices in New York and Tokyo. It has invested in several Japanese companies that manufacture food and beverage products, including Bull-Dog Sauce,
605:"When Steel Partner's bid for an instant noodle maker was trounced by a white knight, the fund was still able to sell its shares for a 24 per cent premium to the level it was prepared to pay."
259:
May 18: Steel Partners initiated a tender offer at ¥1,584 per share with the intention of acquiring 100% of Bull-Dog Sauce stock. It was widely suggested that Steel Partners would attempt
537:
See generally Gilson, Ronald J., "Unocal Fifteen Year Later (and What We Can Do About It)" . Delaware Journal of Corporate Law, Vol. 26, No. 2, pp. 491-513, Nov. 2001 Available at SSRN:
549:
Gilson, Ronald J., "Unocal Fifteen Year Later (and What We Can Do About It)" at page 496. Delaware Journal of Corporate Law, Vol. 26, No. 2, pp. 491-513, Nov. 2001 Available at SSRN:
212:
allowed to issue discriminatory stock warrants to prevent a shareholder from effecting a hostile takeover. However, The High Court noted an important exception: a board of directors
172:
The Bull-Dog Sauce Co., Ltd. is a Japanese company engaged primarily in the manufacture and sale of food seasonings and sauces; it also owns and leases apartments and buildings.
284:
June 24: At the general shareholders' meeting, the Bull-Dog Sauce's proposals to change the corporate charter and issue stock warrants were both approved with 83.4% of the vote.
293:
August 7: The Supreme Court rejected Steel Partners' appeal, upholding the decisions by the Tokyo District Court and the Tokyo High Court to deny Steel Partners' motions.
425:
337:
section "Findings". The District Court in turn had relied on the earlier Nippon Broadcasting Case to support these rulings. See above section "Legal Background."
278:
June 15: Steel Partners changed the terms of its tender offer, raising the price to ¥1,700 and pushing the expiration date back from 28 June to 10 August.
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July 9: The Tokyo High Court rejected Steel Partners' appeal, upholding the Tokyo District Court's denial of Steel Partners' injunction request.
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The Supreme Court decision was widely seen as a validation of the legality of the poison pill takeover defense scheme under Japanese law.
675:
Osaki, Sadakazu, "The Bull-Dog Sauce Takeover Defense" at pages 13-14. Nomura Capital Market Review Vol. 10, No. 3 Available at SSRN:
453:
758:
729:
618:
Osaki, Sadakazu, "The Bull-Dog Sauce Takeover Defense" at page 2-3. Nomura Capital Market Review Vol. 10, No. 3 Available at SSRN:
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A takeover defense plan (such as a poison pill) need not be laid out by management prior to a takeover attempt in order to be fair.
699:
Osaki, Sadakazu, "The Bull-Dog Sauce Takeover Defense" at page 15. Nomura Capital Market Review Vol. 10, No. 3 Available at SSRN:
663:
Osaki, Sadakazu, "The Bull-Dog Sauce Takeover Defense" at page 12. Nomura Capital Market Review Vol. 10, No. 3 Available at SSRN:
580:
Osaki, Sadakazu, "The Bull-Dog Sauce Takeover Defense" at page 14. Nomura Capital Market Review Vol. 10, No. 3 Available at SSRN:
401:
Osaki, Sadakazu, "The Bull-Dog Sauce Takeover Defense" at page 13. Nomura Capital Market Review Vol. 10, No. 3 Available at SSRN:
716:
Osaki, Sadakazu, "The Bull-Dog Sauce Takeover Defense" at page 9. Nomura Capital Market Review Vol. 10, No. 3 Available at SSRN:
687:
Osaki, Sadakazu, "The Bull-Dog Sauce Takeover Defense" at page 5. Nomura Capital Market Review Vol. 10, No. 3 Available at SSRN:
651:
Osaki, Sadakazu, "The Bull-Dog Sauce Takeover Defense" at page 7. Nomura Capital Market Review Vol. 10, No. 3 Available at SSRN:
639:
Osaki, Sadakazu, "The Bull-Dog Sauce Takeover Defense" at page 4. Nomura Capital Market Review Vol. 10, No. 3 Available at SSRN:
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Osaki, Sadakazu, "The Bull-Dog Sauce Takeover Defense" at page 2. Nomura Capital Market Review Vol. 10, No. 3 Available at SSRN:
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June 28: The Tokyo District Court rejected Steel Partners' request for an injunction blocking Bull-Dog Sauce's takeover defense.
703: ; "オしたがって，抗告人関係者が原審のいう濫用的買収者に当たるといえるか否 かにかかわらず，これまで説示した理由により，本件新株予約権無償割当ては，株 主平等の原則の趣旨に反するものではなく，法令等に違反しないというべきであ る。",
88:
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June 19: Steel Partners withdrew the portion of the injunction requesting prohibition of the stock warrant resolution.
782:
733:
465:
454:"Steel Partners Urges Nissin to Improve Operations, Efficiency; Offers Recommendations to Enhance Corporate Value"
833:
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On March 28, 2008, Sapporo shareholders voted to renew the company's poison pill takeover defense plan.
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May 2007: Steel Partners was the largest shareholder of Bull-Dog Sauce with 10.25% of shares.
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Japanese characteristics." Indeed, in the Nippon Broadcasting Case, both sides referenced
8:
565:
525:
500:
103:
813:
84:
446:"Steel Partners Submits to House Foods Corp. Suggestions to Improve Corporate Value"
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On March 30, 2007, Sapporo Holdings Ltd. shareholders voted two-thirds in favor of
71:
company's best interest; it cannot be a move made by management to protect itself.
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contains ample information about the company's activities in Japanese and English
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413:
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takeover defense measures in response to a takeover threat from Steel Partners.
107:
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On April 18, 2008, Steel Partners sold its remaining stake in Bull-Dog Sauce.
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was similarly seen in all three courts' rulings in the Bull-Dog Sauce Case
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566:"In the Shadow of Delaware? The Rise of Hostile Takeovers in Japan"
526:"In the Shadow of Delaware? The Rise of Hostile Takeovers in Japan"
501:"In the Shadow of Delaware? The Rise of Hostile Takeovers in Japan"
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Japan High Court Keeps Bull-Dog Sauce From Steel Partners' Jaws
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Company Law Article 109-1; Company Law Article 247-1, 247-2.
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provides no information about the company, however the
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The following were among the Supreme Court's findings:
771:"Sapporo, Facing Steel Offer, Renews Takeover Defense"
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in their briefs to the trial court. The influence of
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regarding hostile takeover defense plans (such as the
555:
783:"Steel Partners exits Japan's Bull-Dog after fight"
267:, a strategy that had previously proven profitable.
759:"Steel Partners Moderates Its Approach To Sapporo"
450:"Sapporo rejects takeover bid from Steel Partners"
217:out four examples of clearly abusive motives: (1)
820:
747:"Open Wide For Your Poison Pill, Steel Partners"
809:Landmark cases of the Supreme Court of Japan
568:at page 2172, 105 Colum. L. Rev. 2171 (2005)
452:, International Herald Tribune, 2008-02-26;
202:
513:Full text of the Tokyo High Court decision
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383:
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734:"Steel Partners loses final court appeal"
466:"Steel Partners loses final court appeal"
332:Validation of Tokyo District Court ruling
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271:general shareholders' meeting on 24 June.
41:株主総会決議禁止等仮処分命令申立て却下決定に対する抗告棄却決定に対する許可抗告事件
528:, 105 Colum. L. Rev. 2171, 2193-4 (2005)
481:"Sapporo investors approve poison pill"
378:
821:
705:Full text of the Supreme Court Ruling
456:, AOL Money & Finance, 2008-04-02
167:
341:Rejection of Tokyo High Court ruling
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197:
13:
594:"Lichtenstein Takes on Japan Inc."
346:above section "Legal Background."
14:
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718:http://ssrn.com/abstract=1031031
701:http://ssrn.com/abstract=1031031
689:http://ssrn.com/abstract=1031031
677:http://ssrn.com/abstract=1031031
665:http://ssrn.com/abstract=1031031
653:http://ssrn.com/abstract=1031031
641:http://ssrn.com/abstract=1031031
620:http://ssrn.com/abstract=1031031
582:http://ssrn.com/abstract=1031031
503:, 105 Colum. L. Rev. 2171 (2005)
403:http://ssrn.com/abstract=1031031
391:http://ssrn.com/abstract=1031031
263:or hope for the appearance of a
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497:http://ssrn.com/abstract=872248
428:at BusinessWeek.com. The main
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736:, Financial Times, 2007-08-07
609:, Financial Times, 2007-06-07
468:, Financial Times, 2007-08-07
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151:The Bull-dog Sauce Case is a
19:SCOJ 2007 No. 30 (平成19(許)30)
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773:, Bloomberg.com, 2008-03-28
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10:
855:
732:, Forbes.com, 2007-08-08;
596:, Businessweek, 2007-06-18
499:; or Milhaupt, Curtis J.,
749:, Forbes.com, 2007-07-10.
483:, Japan Times, 2007-03-30
434:Steel Partners Japan site
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804:Judicial system of Japan
761:, Forbes.com, 2008-03-10
414:BULL-DOG SAUCE CO., LTD.
231:Unocal v. Mesa Petroleum
203:Nippon Broadcasting case
155:case that resulted in a
448:, Reuters, 2008-04-07;
161:shareholder rights plan
707:, page 9 (in Japanese)
298:Supreme Court decision
153:Supreme Court of Japan
28:Supreme Court of Japan
834:Japanese business law
785:, Reuters, 2008-04-17
564:Milhaupt, Curtis J.,
524:Milhaupt, Curtis J.,
493:Full text of the case
39:Bull-dog Sauce Case (
607:"Japanese takeovers"
30:(Second Petty Bench)
430:Steel Partners site
829:Corporate case law
426:Steel Partners LLC
168:Factual background
839:Japanese case law
814:Politics of Japan
416:on Google Finance
157:landmark decision
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96:Associate Justice
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185:Nissin Foods
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192:poison pill
177:House Foods
116:Yuki Furuta
100:Osamu Tsuno
60:第61巻5号2215頁
57:Reported at
823:Categories
372:References
728:See E.G.
320:equality.
275:warrants.
261:greenmail
219:greenmail
135:Unanimous
85:Isao Imai
793:See also
327:however.
303:Findings
132:Majority
181:Sapporo
65:Holding
49:Decided
350:Impact
245:Unocal
241:Unocal
236:Unocal
225:Unocal
183:, and
24:Court
120:古田佑紀
112:中川了滋
214:was
210:not
114:),
106:),
104:津野修
89:今井功
43:)
825::
626:^
573:^
557:^
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380:^
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