Blog: Dean BestPrivate equity ready for public fight

Dean Best | 28 June 2007

The tenacity of private equity has been on display in Japan in the ongoing battle to buy the country’s iconic sauce manufacturer, Bull-Dog Sauce Co.

US hedge fund Steel Partners has pledged to fight on its battle to buy Bull-Dog despite suffering a legal setback earlier today (28 June).

Bull-Dog, which is trying to stave off a hostile bid from Steel Partners (also a shareholder in the company), won a court ruling that allows it to dilute the hedge fund’s stake in the business through the issue of new shares to other investors.

However, Steel Partners has launched an immediate appeal, arguing that Bull-Dog’s “poison pill” defence unfairly discriminates against the hedge fund.

Bull-Dog has levelled claims about Steel Partners’ intentions for the business that are familiar refrains from those concerned at the threat of being taken over by private equity.

Bull-Dog has said that Steel Partners’ bid, despite being a 26% premium to Bull-Dog’s share price over the last 12 months, is not in the interest of other shareholders and would “damage the corporate value”  of the business.

For its part, Steel Partners has come out with the gloves off. The hedge fund has tried to put the wind up Japanese decision-makers, arguing that Bull-Dog’s “poison pill” plan would weaken international faith in the integrity of the Japanese capital markets, and will not only deter investment in Japanese companies but also undermine Japan's efforts to become a global financial centre”.

From New York to London, from Frankfurt to Tokyo, private equity groups are seen as mysterious institutions to outsiders. A lack of public access and exposure has led to doubts and suspicion about the motives of private equity groups when they have a company in their sights.

However, when what they covet is under threat, private equity groups seem tenacious in battle – and only too ready to use public scare tactics of their own.


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