Cerberus to secure around one third of Japan's Seibu - report

According to the Japan Times, the stake increase will give Cerberus power to veto major board proposals at shareholders meetings. However, the firm is not expected to reach its goal of acquiring a 44.67% stake and the power to nominate nine members of the Japanese rail and hotel operator's 18-strong board.

Cerberus is already the largest shareholder in Seibu with a 32.44% stake. This latest move to increase its holding has escalated a row between the private equity firm and Seibu that dates back to a dispute over the timing and pricing of an IPO last year.

Seibu Holdings President Takashi Goto reiterated his opposition to the takeover bid on Tuesday.

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 after misstating stakes held by shareholders in contravention of exchange rules.

The buyout market continues to be challenging for private equity in Japan where foreign investors are regarded with suspicion by many corporate heads and politicians.

Earlier this year the Japan Private Equity Association (JPEA) - which counts a host of global and local PE firms among its members - accused government-funded entities, such as Innovation Network of Japan (INCJ), of squeezing out opportunities for private capital and delaying the restructuring of ailing companies.

The comments came just months after INCJ bailed out chipmaker Renesas Electronic Corp to the tune of JPY150 billion ($1.8 billion), frustrating plans by KKR to invest JPY100 billion in the company.

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