Steel Partners Withdraws Proposal to Acquire 33.3% of Sapporo Citing Company's Ever-Worsening Performance and Refusal to Negotiate

Business Wire, Feb 17, 2009

Intends to Vote Against Re-Election of Board and Against Extension of AWS

TOKYO -- Steel Partners Japan Strategic Fund (Offshore), L.P. ("Steel Partners") today delivered to Sapporo Holdings Limited (TOKYO:2501) ("Sapporo" or the "Company") a letter stating that it is withdrawing its current proposal to acquire 33.3% of the outstanding voting rights of Sapporo at [yen]875 per share. Steel Partners said it was withdrawing the proposal due to the Company's ever-worsening financial and operational performance and continued refusal to negotiate the terms of an acceptable offer to shareholders.

In the letter addressed to Mr. Takao Murakami, Representative Director and President of Sapporo, Warren Lichtenstein of Steel Partners wrote: "Over the last two years, Steel Partners has repeatedly attempted to engage in an open dialogue with the Company's Board of Directors (the "Board") and to discuss and negotiate our proposal with you. At no point were you or the Board willing to discuss, let alone meaningfully negotiate, an acceptable price or terms of a tender offer or other share acquisition plan."

Mr. Lichtenstein added: "Unfortunately, Sapporo's performance continues to deteriorate, negatively affecting shareholders and stakeholders who have watched the Company's prospects diminish and its share price drop lower and lower." Steel Partners noted that shareholders include important Company stakeholders including customers, suppliers, employees and pensioners.

As a result of management's poor performance, Steel Partners said it intends to vote against the re-election of the Board and against an extension of the Advanced Warning System ("AWS") at the upcoming annual general meeting. Among other management missteps, Steel Partners cited Sapporo's fall from third to fourth largest brewery in Japan, its loss of market share in the "super premium" beer segment, the termination of Diageo's 44-year relationship with Sapporo to distribute Guinness in Japan, and Sapporo repeatedly missing sales, operating income and net income budgets since Mr. Murakami became President in 2005.

Steel Partners noted that it has been offering ideas and suggestions for improving the Company's performance and corporate value since December 2005, including a detailed 100-plus page Value Enhancement Plan offered to the Company in November 2007. In nearly all cases, the Company rejected or ignored such suggestions.

Steel Partners also said that it believes the Board is breaching its fiduciary duties by using the AWS to entrench itself at the expense of shareholders and other stakeholders, contrary to the intent of the AWS as stated in June 2008 by the METI (Ministry of Economy, Trade and Industry) Corporate Value Study Group.

On February 15, 2007, Steel Partners originally submitted a proposal to purchase 66.6% of the stock of Sapporo for [yen]825 per common share. On March 10, 2008, Steel Partners sent the Company a revised proposal whereby Steel Partners would seek an ownership position of 33.3% of the Company's outstanding voting rights, at an increased offer price of [yen]875 per common share. On Monday, February 16, 2009, Sapporo's closing price was [yen]422 per share, or approximately 52% lower than the [yen]875 per share included in Steel Partners' revised proposal.

Steel Partners has been a shareholder of Sapporo since 2004 and, together with its related parties, is currently the largest shareholder holding 73,400,000 shares, or approximately 18.63% of the Company's outstanding shares.

THIS IS NOT, NOR SHALL IT BE DEEMED TO BE, A SOLICITATION OF PROXIES FOR THE UPCOMING ANNUAL GENERAL MEETING OF THE COMPANY.

Text of the letter to Sapporo follows. A copy of the letter, including supporting documentation, can be found at www.spjsf.jp:

STEEL PARTNERS JAPAN ASSET MANAGEMENT, LP

24 FEDERAL STREET

BOSTON, MA 02110

February 17, 2009

Sapporo Holdings Limited

20-1, Ebisu 4-chome, Shibuya-ku, Tokyo 150-8522

Attention: Mr. Takao Murakami, Representative Director and President

Steel Partners Japan Strategic Fund (Offshore), L.P.

P.O. Box 2681 GT, Century Yard, 4th Floor

Cricket Square, Hutchins Drive

George Town, Grand Cayman

Dear Mr. Murakami,

Steel Partners Japan Strategic Fund (Offshore), L.P. ("Steel Partners") hereby withdraws its current proposal to acquire 33.3% of the outstanding voting rights of Sapporo Holdings, Ltd. ("Sapporo" or the "Company") at [yen]875 per share. We have withdrawn our proposal primarily because of the Company's ever-worsening performance, as evidenced in the attached charts, and continued refusal to negotiate the terms of an acceptable offer to shareholders. As a result of management's poor performance, Steel Partners intends to vote against both the re-election of the Board and an extension of the AWS at the upcoming annual general meeting.

AWS

Over the last two years, Steel Partners has repeatedly attempted to engage in an open dialogue with the Company's Board of Directors (the "Board") and to discuss and negotiate our proposal with you. At no point were you or the Board willing to discuss, let alone meaningfully negotiate, an acceptable price or terms of a tender offer or other share acquisition plan. Since our initial proposal in February 2007, the Board has asked us to answer numerous questions and has asked for ideas and suggestions for improving the Company's corporate value, notwithstanding the fact that we have been making suggestions since December 2005. In response to the Board's request, we submitted a detailed 100-plus page Value Enhancement Plan in November 2007. The Value Enhancement Plan, which was prepared at significant cost to us, provided a thorough analysis and insightful suggestions that we believe could improve corporate and shareholder value.