July 5 (Bloomberg) -- Warren Lichtenstein's Steel Partners fund failed to win control of Japan's Tenryu Saw Manufacturing Co., its second setback in the country in less than a month.

Steel Partners Japan Strategic Fund (Offshore) L.P., which offered to buy all the company's shares, got tenders for 2.57 percent of Tenryu's common stock, bringing its stake to 11.18 percent, it said in a statement. The fund's share of voting rights will rise to 11.73 percent from 9.04 percent.

Steel Partners, which began buying stock in Tenryu Saw at least two years ago, will maintain its investment in the firm, based in Shizuoka prefecture, central Japan, the fund said in the press release. The stock has gained 56 percent this year.

``In a way, they've already won,'' said Mitsushige Akino, who oversees the equivalent of $470 million at Ichiyoshi Investment Management Co. in Tokyo. ``They're making enough money without completing the offer.''

Steel Partners' May 23 offer for Tenryu Saw was 15 percent higher than the previous day's closing price.

New York-based Steel Partners has failed in all its takeover bids for Japanese companies, prompting Lichtenstein to say last month that it is ``misunderstood'' in Japan. The fund said earlier it didn't plan to sell its Tenryu stake to a third party, and would keep the current management if its bid succeeded.

Bull-Dog, Sapporo

Japanese companies that have been in Steel Partners' sights since 2003 include Bull-Dog Sauce Co., a maker of condiments, machinery lubricants maker Yushiro Chemical Industry Co., noodle maker Myojo Foods Co. and brewer Sapporo Holdings Ltd. All its offers have been thwarted, either by anti-takeover measures or friendly tenders by other companies.

Steel Partners, which owns 10.15 percent of Bull-Dog Sauce, on May 16 made a tender offer of 1,584 yen for the remaining shares in the company. It raised the bid to 1,700 yen on June 15, valuing Bull-Dog at 32.3 billion yen ($263 million).

Shareholders of Bull-Dog on June 24 approved company- proposed measures to fend off the fund, including a warrants issue on terms that would dilute Steel Partners' stake.

Last week, the Tokyo District Court rejected a request from Steel Partners for an injunction that would prevent Bull-Dog from issuing the warrants, according to lawyers representing the fund. Steel Partners is appealing the decision.

Shares Surge

Shares of Bull-Dog surged today in Tokyo after the company issued three warrants per share. Bids to buy outnumbered sell offers on the Tokyo Stock Exchange, preventing trading under exchange rules. The stock was last bid at 1,325 yen as of 2:36 p.m., compared with a closing price yesterday of about 370 yen.

Pricing has been adjusted to take into account the effect of the warrants.

Sapporo, Japan's third-largest brewer, won shareholder approval in March to take steps designed to thwart a hostile takeover bid led by Steel Partners. More than two-thirds of shareholders supported the measures, Chief Executive Takao Murakami said.

Sapporo, which makes Yebisu beer and distributes Guinness stout and Beringer wines in Japan, adopted revised defense measures after Steel Partners said it wanted to raise its stake.

``The outside world watches with great interest and a mixed sense of mirth and sadness at the travails of these Japanese firms,'' said Kirby Daley, strategist at Societe Generale SA's Fimat unit in Hong Kong. ``With the continued efforts of Steel Partners and others, however, the educational process of Japanese shareholders will continue.''

To contact the reporter on this story: Tomoko Yamazaki in Tokyo at tyamazaki@bloomberg.net.

Last Updated: July 5, 2007 02:59 EDT