Steel Partners Calls on Ezaki Glico to Address Losses from Cross-Shareholdings

TOKYO--(BUSINESS WIRE)--Steel Partners Japan Strategic Fund (Offshore), L.P. (“Steel Partners”) today sent to Ezaki Glico Co., Ltd. (2206.JP) (“Glico” or the “Company”) a letter citing the Company’s failure to reduce significant cross-shareholdings in Japanese companies with which it has no apparent synergies and stating concern over severe financial losses resulting from such cross-shareholdings.

In the letter, Steel Partners noted:

• On October 6, 2008, the Company announced a 2.2 billion yen write-off of its investment portfolio for three months ended September 30, 2008.
• The Company’s investment portfolio had been in a steep decline for at least 18 months prior to this announcement.
• The Board had ample time to reduce its holdings, which have been a significant drag on Glico’s value.
• The Board has failed to explain to shareholders its rationale for such investments or how this was an efficient use of the Company’s capital.

Steel Partners also noted that it has been calling on the Company to reduce its cross-shareholdings since earlier this year, including as part of Steel Partners’ February 2008 presentation to the Company. In a letter sent to the Company in May 2008, Steel Partners raised concern that the value of Glico’s investments in Nissin Food Products, Taisho Pharmaceutical, TBS, Duskin and House Foods declined 3.6 billion yen over the twelve months ended March 31, 2008, all while the Company’s profitability continued to deteriorate.

“Despite the deterioration of the Company’s operating performance, the Company’s management insisted that its plans were superior to our suggestions,” wrote Warren Lichtenstein of Steel Partners. “Unfortunately for everyone, actual performance over the long-term clearly indicates otherwise. We once again suggest that management seriously consider the proposals we made earlier this year.”

Steel Partners has been an investor in Glico since 2004 and, together with its related parties, is the largest shareholder of the Company, holding 17,077,000 shares, or approximately 11.8% of the Company’s outstanding shares as of October 21, 2008.

Full text of letter to Glico follows:

October 22, 2008

Ezaki Glico Co., Ltd.

4-6-5 Utajima

Nishiyodogakwa-ku, Osaka

Osaka, 555-8502 Japan

Attention: Katsuhisa Ezaki

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

Cayman Islands, British West Indies

Dear Mr. Ezaki:

As you know, Steel Partners Japan Strategic Fund (Offshore), L.P. (“Steel Partners”), together with our related parties, currently owns approximately 11.8% of the outstanding shares of Ezaki Glico Co., Ltd. (“Glico” or the “Company”).

We have owned shares of Glico since February 2004, in line with our philosophy of being long-term, patient shareholders. During that time, we have met with your management team on several occasions to discuss the Company and, in February 2008, we provided suggestions that we believe could help improve Glico’s corporate value. In that presentation, we stated our concern regarding Glico’s significant cross-shareholdings in Japanese companies with which it has no apparent synergies. We questioned how these investments furthered Glico’s corporate philosophy and highlighted the significant decline in the value of these investments.

In our letter to you in May 2008, we reminded you and the Company’s Board of Directors (the “Board”) that management is responsible for running a food company, not an investment portfolio. We noted that the value of Glico’s investments in Nissin Food Products, Taisho Pharmaceutical, TBS, Duskin and House Foods declined 3.6 billion yen over the twelve months ended March 31, 2008, all while the Company’s profitability continued to deteriorate.

On October 6, 2008, the Company announced a 2.2 billion yen write-off of its investment portfolio for the three months ended September 30, 2008. The Company’s investment portfolio had been in a steep decline for at least 18 months prior to this announcement. The Board had ample time to reduce its holdings, which have been a significant drag on Glico’s value. Moreover, the Board has failed to explain to shareholders its rationale for such investments or how this was an efficient use of the Company’s capital.

Despite the deterioration of the Company’s operating performance, the Company’s management insisted that its plans were superior to our suggestions. Unfortunately for everyone, actual performance over the long-term clearly indicates otherwise. We once again suggest that management seriously consider the proposals we made earlier this year.

Should you wish to reconsider your policy of not meeting with shareholders, we are prepared to meet you at your earliest convenience in Japan or New York.

Sincerely,

Warren G. Lichtenstein

Copy to: Thomas J. Niedermeyer, Jr., managing partner

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.