UPDATE 3-U.S. fund ends bid to raise Japan brewer stake
* U.S. fund drops bid to raise stake in Sapporo
* cites brewer's worsening financial, operational performance
* fund has no plans to sell existing Sapporo stake - source
* fund to vote against Sapporo board re-election (Adds details)
By Taiga Uranaka and Junko Fujita
TOKYO, Feb 17 (Reuters) - U.S. fund Steel Partners withdrew a $548 million bid to raise its stake in Japanese brewer Sapporo Holdings (2501.T: Cotización) to a third, citing the beer maker's deteriorating earnings.
Steel Partners, which owns 18.6 percent of Japan's fourth-biggest brewer and has sizeable holdings in at least two dozen other Japanese companies, last year offered to increase its stake in Sapporo to 33.3 percent for 875 yen per share.
The market had seen little chance of success for the bid, worth 50.6 billion yen ($548 million), with Sapporo's shares closing down 9.7 percent at 381 yen ahead of the announcement on Tuesday, less than half the Steel Partners offer price. "It's not a surprise at all. Steel has been unloading stakes in other firms," said Tokushi Yamasaki, a food sector analyst at Daiwa Institute of Research.
"Rather, attention would be on what will happen to its (existing) stake. If Steel decides to sell, would it be sold in the market or to someone, including Sapporo's rival breweries?" he said. Continuación...