Managers of Japan’s Bull-Dog Sauce on Sunday strengthened their hand against Steel Partners, the US hedge fund that is pursuing an unsolicited takeover of the condiment maker, after an overwhelming majority of shareholders approved a proposal to dilute the fund’s ownership stake.

The move marks the latest twist in a high-profile battle which is turning into a litmus test of Japanese attitudes towards corporate reform and activist investors – not least because unsolicited bids from hedge funds have been rare in the past.