PLC - US activist hedge fund wins Japanese company's board vote

Page 1 of 2

US activist hedge fund wins Japanese company's board vote
Resource type: Legal update: archive
Status: Published on 12-Jul-2009
Jurisdiction: JapanAtsumi & Partners

SpeedreadAn arm of US activist hedge fund group, Steel Partners, won a vote to elect board members at theannual general meeting of Aderans Holdings Company Limited (Aderans), Japan's biggest
wigmaker, after successfully gaining the support of other shareholders on how to improve Aderans'business.

On 28 May 2009, Steel Partners Japan Strategic Fund (Offshore), LP, an arm of US activist hedge
fund group, Steel Partners, won a vote to elect board members at the annual general meeting ofAderans Holdings Company Limited (Aderans), Japan's biggest wigmaker.
Steel Partners is the largest shareholder of Aderans, holding 26.7% of its shares. Aderans, wishing
to remove Steel Partners' influence, agreed with Unison Capital group, a Japanese fund, on acapital alliance including Unison's making a tender offering for Aderans shares. Based on thisalliance Aderans proposed for its shareholders' meeting a slate of board members including people
from Unison, and also proposed Aderans tender its treasury shares to Unison.
Steel Partners lobbied other shareholders, persuading them to vote against Aderans' proposals
and to vote for Steel Partners' counter-proposal of another board members' slate.
Unison's tender offer price was 5.8% higher than the market value of Aderans' shares, but Steel
Partners asserted to other shareholders that the price was lower than the company's book value,
and that Aderans would dilute existing shareholder interests by unnecessarily disposing of its
treasury shares.
Steel Partners also persuaded other shareholders that the nominees for the board proposed by
Steel Partners, most of whom are Japanese and have substantial experience in managing blue
chip Japanese companies, would improve the currently poor performance of Aderans' business.
Steel Partners did not solicit proxy votes but instead asked other shareholders to vote bythemselves.
At the general meeting, Aderans' proposals regarding nominees from Unison to be appointed tothe board were voted down, which also made Aderans withdraw its proposal of tendering itstreasury shares to Unison, while all nominees from Steel Partners were elected to the board.
Foreign activist funds were less active at general shareholders' meetings of Japanese companies
in 2008 compared to previous years. This is partly due to cash shortages resulting from the current
financial crisis, and to the fact that such funds have softened their approach from thrusting theirdemands on target companies to tactfully negotiating with such companies or obtaining othershareholder's support. Such funds have learned through many defeats in proxy fights in previousyears that simply pushing hostile demands for increasing dividends on shares is unlikely to be

http://uk.practicallaw.com/4-386-5827

2011/03/02

PLC - US activist hedge fund wins Japanese company's board vote

Page 2 of 2

supported by Japanese shareholders, who are sceptical about foreign funds' long term
commitment to target companies.
While foreign funds are generally less active, shareholders in Japanese companies are generally
more conscious about performance of their shares under the current economic environment.
According to a sampling survey by Nomura Securities published in May 2009, only 22.2% ofshareholders who wish to exercise their voting rights, compared to 31.6% in 2008 and 52% in
2007, answered that they will vote for all companies' proposals. Japanese companies are
becoming more accountable to shareholders on their business performance and future businessstrategy. The victory of Steel Partners resulted from its successful efforts to obtain support of othershareholders on how to improve Aderans' business.

Resource information
Resource ID: 4-386-5827
Published: 12-Jul-2009
Products: PLC Cross-border, PLC Global Finance, PLC US Law Department

Related content
Topics
Cross-border: finance (http://ld.practicallaw.com/topic7-200-1612)© Practical Law Publishing Limited 1990-2011 (http://www.practicallaw.com/0-207-4980). Terms of use (http://www.practicallaw.com/9-103-0884) andprivacy policy (http://www.practicallaw.com/jsp/privacy.jsp). Subscription enquiries +44 (0)20 7202 1220 or email subscriptions@practicallaw.com The
reference after links to resources on our site (e.g. 2-123-4567) is to the PLC Reference ID. This will include any PDF or Word versions of articles.

http://uk.practicallaw.com/4-386-5827

2011/03/02