By Makiko Yamazaki
TOKYO (Reuters) -The Tokyo High Court on Tuesday dismissed a request for an injunction against manufacturer Tokyo Kikai Seisakusho Ltd's plan to issue a poison pill, a decision its top shareholder will now appeal to the supreme court.
Asia Development Capital (ADC) is seeking to block Tokyo Kikai from issuing new shares that would dilute its 40% stake and prevent it from mounting a takeover.
The fund plans to appeal to Japan's supreme court, ADC's lawyer told Reuters, after the Tokyo High Court on Tuesday dismissed its appeal of a lower court ruling against it.
The legal battle is likely to spark concern among foreign investors and could cast a shadow over the future of hostile takeover bids in the world's third-largest economy.
ADC built up its 40% stake in the manufacturer of newspaper printing presses in a matter of weeks. Shareholders in Tokyo Kikai, excluding ADC, have approved an issuance of new shares that would dilute the fund's stake.
In a statement, Tokyo Kikai said it believed its plan to issue new shares was "legal and appropriate" and called the court's dismissal of the appeal a "reasonable decision that recognises the company's argument".
ADC's original attempt to block the share issue was rejected by the Tokyo District Court.
A victory for Tokyo Kikai holds the potential to make it much easier for other Japanese companies to use poison pills.