Steel Partners Japan Comments on Meeting with Sapporo Holdings; Urges Management to Discuss Terms of Friendly Transaction

Business Wire,  May 7, 2008  

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TOKYO -- Steel Partners Japan Strategic Fund (Offshore), L.P. ("SPJSF") issued the following statement regarding its meeting with the Board of Directors and management of Sapporo Holdings Limited (2501.JP) ("Sapporo" or the "Company") held on May 2, 2008.

During the meeting at Sapporo's headquarters in Tokyo, SPJSF reiterated its interest in acquiring a larger stake in the Company on a friendly basis. The Company, however, declined to discuss economic terms or conditions under which such an additional investment would be acceptable.

"We are disappointed that Sapporo's management was not ready to negotiate terms of a possible agreement, but instead insisted that SPJSF answer additional questions that are of little relevance to the proposed transaction," stated Warren Lichtenstein, managing partner of SPJSF.

"The delay in starting negotiations has now exceeded any timetable envisioned by Guidelines Regarding Takeover Defense issued by the Ministry of Economy, Trade and Industry and the Ministry of Justice as part of the AWS process," Mr. Lichtenstein stated. "Given this exceptional and unnecessary delay and SPJSF's willingness to work with Sapporo to reach an understanding as to the terms by which SPJSF could increase its ownership position, we expect that the Board of Directors will promptly advise us on what terms, including price, ownership percentage and standstill terms that the Board of Directors could support. We believe the Board of Directors has a fiduciary duty to engage in meaningful discussions with SPJSF and that it is ignoring the interests of all stakeholders by refusing to do so and is using the AWS process as a shield."

SPJSF noted that more than 14 months have passed since it first proposed increasing its stake in the Company, and that SPJSF complied with Sapporo's advance warning system process in conjunction with its proposal. On March 10, 2008, SPJSF sent the Company a revised proposal in response to the concerns stated by the Company's Board of Directors on February 26, 2008, among them that SPJSF was seeking a control position in the Company. Under the revised proposal, SPJSF would seek an ownership position of 33.3% of the Company's outstanding voting rights, at an increased offer price of Y= 875 per common share.

SPJSF has been a shareholder in Sapporo since June 2004 and is currently the largest single shareholder holding, together with its related parties, 73,400,000 shares, or 18.63% of Sapporo's outstanding shares.

About SPJSF

Steel Partners Japan Strategic Fund (Offshore), L.P. is a long-term relationship/active value investor that seeks to work with the management of its portfolio companies to increase corporate value for all stakeholders and shareholders.

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