Cerberus fails in challenge to Seibu board
Cerberus Capital Management failed to its attempt to assert more control over the management of railway and property group Seibu Holdings, as shareholders voted down the PE firm's plan to secure more board seats.
Cerberus had proposed eight new directors, including former US Vice President Dan Quayle and former US Treasury Secretary John Snow, Reuters reported.
"Seibu last year unilaterally told us that our capital agreement was no longer good. They had also rejected our request for conversation," said Louis Forster, senior managing director at Cerberus. "That attitude is against the Japan's latest growth initiative driven by Abenomics to bring more foreign investors."
Last week, Cerberus, Seibu's biggest shareholder, criticized the handling of the business in a 22-page open letter. The letter, addressing Seibu President Takashi Goto, lambasts the company for failing to hit earnings targets and for its governance and disclosure practices. The firm also asked Goto to explain how the current board was being supervised and being held accountable for its performance.
During the shareholders meeting, Goto said if Cerberus' proposal had been accepted, the company would be controlled by the US fund. "The more influence from Cerberus on Seibu's management could hurt our corporate value in a long term," he said.
Relations between the two parties turned sour in 2011 following disagreements over the timing and pricing of the company's planned IPO.
Cerberus initially paid $802 million for a 29.9% stake in the company in 2006, participating in a $1.2 billion bailout alongside Nikko Principal Investments. Seibu was delisted from the Tokyo Stock Exchange in 2004 amid a scandal over misstating stakes held by shareholders in contravention of exchange rules.
The PE firm raised its stake in Seibu by to 35.48% earlier this month following an unsolicited public tender, although it fell short of its 44.7% target. The tender offer had been sparked by moves from Seibu to severe formal ties with the firm.
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