Steel Partners Japan Strategic Fund (Offshore), L.P. v. Bull-Dog Sauce Co., Inc.

Steel Partners Japan Strategic Fund (Offshore), L.P., (SPJ) (plaintiff), an investment or hedge fund, owned 10 percent of the shares of Bull-Dog Sauce Co., Inc. (Bulldog) (defendant) when SPJ decided to create a special-purpose vehicle (SPV)—Steel Partners Japan Strategic Fund (Offshore), L.P.—to acquire all of the shares of Bulldog. Through the SPV, SPJ offered to acquire Bulldog’s shares at a premium and later increased that offer. Bulldog’s board of directors opposed the SPJ tender, believing the offer would harm Bulldog’s value and detrimentally affect the other shareholders. At a shareholders’ meeting, the board of directors presented a defensive measure, or poison pill, by which the non-SPJ shareholders could exercise options to acquire substantially more shares for a nominal price, but SPJ would not have access to the same options. In addition, the board proposed paying roughly one-fourth of the tender price to acquire shares from shareholders, which Bulldog intended to compensate SPJ for being unable to participate in the options. SPJ also presented its tender offer proposal at the shareholders’ meeting. The shareholders overwhelmingly approved the board’s proposal, with nearly 90 percent of the vote representing over 80 percent of Bulldog’s capital. Before the shareholders’ meeting, SPJ sought an injunction from the Tokyo District Court, contending that Bulldog’s defensive measure was illegal and violated the doctrine of equal treatment of shareholders. The district court rejected SPJ’s request for an injunction, and the court of appeals (the Tokyo High Court) agreed. SPJ appealed to the Japan Supreme Court.