UPDATE 4-Aderans shareholders back Steel board proposal

* All nominees supported by Steel Partners approved

* Three candidates from rival fund Unison Capital rejected

* Shares dive 7.5 pct, Unison bid seen less likely to succeed

* Unison gave up plans to buy Aderans shares

By Junko Fujita

TOKYO, May 28 (Reuters) - U.S. activist fund Steel Partners toppled the board of wigmaker Aderans Holdings (8170.T) in a shareholder vote on Thursday, in a victory that shows Japanese investors are becoming increasingly vocal.

Activist funds seeking to squeeze higher returns out of poorly performing companies in Japan have previously struggled to win battles against entrenched management at Japanese firms, who could often rely on Japanese investors to back them status quo.

"This is epoch-making," said Yutaka Suzuki, a senior analyst at Daiwa Research Institute.

"At least half of the investors supported proposals made by a foreign fund. Shareholders made their own decision in favour of better management over two competing proposals."

The victory by Steel Partners drove off a bid by a Japanese rival, Unison Capital, to grab a 35 percent stake in the wig maker.

Aderans shares plunged 7.5 percent to 1008 yen to well below the Unison bid price after the vote and the Japanse private equity investor confirmed late Thursday it had withdrawn its management-backed bid.

It was the second time that Aderans shareholders have sided with Steel Partners against management.

Last year they ousted the company's president and most of its board, the first time management in a Japanese company had been ejected under pressure from an activist fund.

Steel Partners was, however, unhappy with that earlier vote as it left in place some board members the fund argued had failed to improve earnings.

In March, Steel Partners proposed a new board but the current board members, working with Unison, fought back with its own proposal for a new management team, including three board members from Unison.

"With today's vote, Aderans' shareholders demonstrated their strong desire for constructive change in the company's leadership and direction and have set a new milestone for corporate governance in Japan," Warren Lichtenstein, the head of Steel Partners, said in a statement.

TWIST

In an unexpected twist, Aderans said its shareholders had also voted to accept three candidates proposed by the current board, although none were from Unison.

"Aderans shareholders all want the value of their holdings to rise through this management change," said Kengo Nishiyama, a senior strategist at Nomura Securities Co.

"And the fact that they voted against three Unison people means they were not happy with the way Unison planned to buy the company's shares."

Unison had said its three members would resign from the board if the fund failed to buy the Aderans stake. That raised concern among shareholders about whether Unison was serious about turning the company around, Nishiyama said.

Unison said last month it would seek to buy at least a 35 percent stake in the wigmaker to become top shareholder ahead of Steel Partners, which owns around 28 percent.

The Japanese fund this week raised its offer price 20 percent to 1,200 yen a share after proxy advisory firms Glass, Lewis & Co and RiskMetrics Group RMG.N recommended shareholders support board members proposed by Steel Partners.

Shareholders were concerned about the last-minute change in the offer price, Nishiyama said.

Steel Partners had urged shareholders to reject the offer of 1,000 yen per share, saying the offer price was below Aderans' book value. [ID:nT288256]

The U.S. hedge fund did not comment on the offer of 1,200 yen per share, which would still be below book value but was higher than recent trading in the shares, which closed at 1090 on Wednesday ahead of the meeting. (Additional reporting by Ritsuko Shimizu; Editing by Rodney Joyce)