Aderans, the world’s largest wigmaker, yesterday became the latest Japanese company to face up to the bald realities of Western-style shareholder activism.

The Tokyo-based toupee manufacturer is bracing itself for a potentially stormy proxy battle after an American investment fund – its largest shareholder, with 26.7 per cent of the stock – initiated an aggressive campaign against management plans to establish antitakeover defences.

Steel Partners Japan Strategic Fund asked Aderans shareholders to vote against the board’s proposal at the annual meeting, which will be held this month.

The management of Aderans is terrified that the firm will fall prey to a hostile takeover, a common fear among listed Japanese companies. Recent strategic failures – the company remains too narrowly focused on the thinning domestic market – make it a potentially ripe target for a turnaround fund.

In this year’s season of shareholder meetings, about 200 Japanese management teams will be proposing antitakeover strategies, including poison pills, golden shares and so-called advance-warning systems (AWSs).

The fear of unwanted takeover attempts has been heightened by a law passed last week that allows foreign companies to use only shares to buy a Japanese target. Although the newly legalised structure of “triangular mergers” cannot be used for hostile bids, its introduction is seen by corporate Japan as a dangerous step towards Wall Street-style business techniques.

In a mailing to about 6,000 Aderans investors, Steel Partners advised that they vote against the AWS proposal because the scheme “would serve to entrench management and diminish its desire to bolster shareholder value”.

Aderans is confident that its expertise will give it global reach, but the management has been criticised by analysts for its failure to deliver solid growth, despite the recent opening of the Hair Wig Joy Plaza in central Tokyo.

Although Aderans optimistically claims in one corporate slogan that “hair-related concerns literally have no boundaries”, investors say that the company has failed to realise the full profit potential of wigs and other hair replacement therapies when millions of baby-boomers are hitting their sixties. Morever, as more Japanese men are opting to flaunt their hairless pates, Aderans has yet to come up with a compelling 21st-century sales pitch for the humble hairpiece.

As Hidekatsu Watanabe, a senior analyst at Mizuho Securities, said: “While the wig market has matured to a point of nearly zero growth . . . advertising strategy has become increasingly vital. Aderans has yet to differentiate itself from rivals.”

Aderans’s global leadership has given it a strategic interest in world baldness. It conducts regular surveys in capital cities worldwide to produce an index of hair-loss rates among men. According to Aderans, the Czech Republic has the highest proportion of follically challenged males, South Korea the lowest.

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