From: Reuters
Published May 29, 2008 02:46 AM

Steel Partners ousts board of Japan's Aderans

By Edwina Gibbs and Aiko Hayashi

TOKYO (Reuters) - U.S. hedge fund Steel Partners helped oust most of the board of Japanese wig maker Aderans Holdings <8170.T> on Thursday, the first time management of a Japanese firm has been ejected under pressure from an activist fund.

The news pushed Aderans shares up nearly 9 percent and marked a rare win in Japan for U.S.-based Steel Partners, which owns 26.7 percent of the wig maker, one of the 30 or so Japanese companies it has been pressuring to improve shareholder returns.

The failure by Aderans to get President Takayoshi Okamoto and all members of its board except outside directors re-elected at its annual shareholders' meeting could also serve as a wake-up call for Japanese management.

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"This is going to be a catalyst," said Yoshinori Nagano, chief strategist at Daiwa Asset Management.

"In the past two to three years, management has increasingly given shareholders more attention, for example by raising dividends ... and this will accelerate the trend of management listening to shareholders," he said.

Steel Partners told Aderans in February it lacked confidence in management and was disappointed with the company's deteriorating performance. Last month Aderans posted a 90 percent fall in net profit for the year ended February 29.

The activist fund has gained significant control of some U.S. firms and it began shaking up corporate Japan in 2004, launching two hostile bids for small Japanese firms.

It has profited some from firms hiking their dividends, but it was slapped back last year when a Tokyo court backed the use of a "poison pill" anti-takeover defense by sauce maker Bull-Dog Sauce Co <2804.T> to thwart the fund's bid.

Blocking the reappointment of board members will be seen as a landmark win for the fund.

"This is in effect the first time where a fund and others have taken the lead and minority shareholders have pushed out management," said Nomura Securities strategist Kengo Nishiyama.

Steel Partners has also taken on management at brewer Sapporo Holdings Ltd <2501.T>, where it is seeking a one-third stake and is pushing for change at confectionery maker Ezaki Glico <2206.T>, false teeth maker Shofu Inc <7979.OS> and spice producer House Foods Corp <2810.T>.

Aderans shares closed up 8.7 percent at 2,020 yen. The benchmark Nikkei average <.N225> rose 3 percent.

(Additional reporting by Aiko Hayashi and Ritsuko Shimizu; Editing by Michael Watson)

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