Cerberus Capital Management raises stake in Seibu Holdings Cerberus Capital Management has won enough shares in Seibu Holdings to block resolutions by management, setting the stage for a showdown between the US private equity firm and the Japanese railways-to-baseball group. The two sides fell out a year ago over the timing of an initial public offering, with Cerberus - the largest shareholder in Seibu with 32.4 per cent - arguing that the group needed more time to improve its business before listing. Seibu then moved to sever formal ties between it and its top investor, prompting Cerberus to launch a hostile tender offer to increase its stake to just over 36 per cent while appointing three new board members. IN Financials In April Cerberus raised the stakes, targeting 45 per cent control and eight new board members, including former US vice-president Dan Quayle. On Saturday, a day after the offer expired, Cerberus announced that it had fallen well short of that goal, winning a 35.5 per cent stake. However, moving past the one-third threshold gives Cerberus the power to veto board proposals, potentially forcing Seibu to the negotiating table ahead of the company's annual meeting of shareholders on June 25. The flare-up comes as foreign interest in Japanese assets is at a multi-year high, lured by the growth-boosting initiatives of prime minister, Shinzo Abe. So far this year non-Japanese investors have bought a net $80bn of stocks, and more money looks to be on the way. In surveys carried out by Bank of America Merrill Lynch in April and May, a quarter of global fund managers said Japan was at the top of their "overweight" lists for the next 12 months. Yet Japanese managers and foreign investors have often disagreed over targets for profitability and horizons for achieving them. In this case, the ill-feeling has been intensified by the fact that it was Seibu which selected a Cerberus-led rescue package after being thrown off the Tokyo Stock Exchange eight years ago, partly on the grounds that the New York-based firm was not demanding a one-third holding. Since the feud came to light on March 12, both Cerberus and Seibu have used the press to accuse the other of a betrayal of trust. Communication between the two sides from that point has been limited to lawyers, according to people familiar with the situation. Following the completion of the tender offer, executives from Cerberus and Seibu are now willing to meet to thrash out their differences, but have so far been unable to agree on the terms of that meeting, the people said. The Y1,400-a-share offer from Cerberus represented the first chance for many small investors in Seibu to offload their shares, which were delisted in December 2004 at Y485. Seibu was ejected from the TSE for making false statements on ownership of its securities, a charge that Seibu admitted. It initially planned to relist last year, but was thwarted by objections from Cerberus, which demanded Seibu hold off until it could command a higher share price. Seibu's assets include the Prince range of hotels, rail routes in north-western Tokyo and the Saitama Seibu Lions baseball team. Cerberus claims that it can boost returns through better management, particularly in the hotels business.