Major chain restaurant operator Colowide Co. said Thursday it will launch a takeover bid for struggling Ootoya Holdings Co., owner of a Japanese-style set-menu eatery business, as the coronavirus pandemic leaves the hospitality sector reeling.

Colowide, which manages izakaya pubs and Gyukaku grilled beef restaurants, will spend up to 7.1 billion yen ($66 million) to increase its stake in Ootoya up to 51.32 percent from its current 19.16 percent holding, seeking to improve the loss-making operator's performance through cost-cutting and improved procurement and food distribution synergies.

The move came after Colowide's proposal to shake up Ootoya's management was rejected at a shareholders' meeting in June, which worsened already frayed ties between the companies.

An Ootoya spokesperson said the company opposes the idea of becoming a subsidiary of Colowide, increasing the odds that the takeover bid will need to be hostile.

Colowide offered 3,081 yen per share in the takeover bid, a sizeable markup on the Ootoya share price which ended at 2,113 yen on Wednesday. Colowide plans to lodge the takeover bid on Friday and will set an Aug. 25 deadline on the offer.

Ootoya will remain listed on the Jasdaq market, mainly for midsize companies, even after the takeover bid, Colowide said.

The two companies both aspire to expand overseas.

Colowide currently operates 227 restaurants in 12 countries and regions, including Southeast Asia, Canada and the United States.

Ootoya operates 105 stores across eight countries and regions as of March 2018, including 45 in Thailand, 32 in Taiwan and four in the United States.

As the coronavirus pandemic's stay-at-home requests kept Japanese consumers from eating out, Ootoya posted a group net loss of 1.15 billion yen in the fiscal year ended in March, its first red ink since being listed in 2001.

It has also been hit by falling sales due to the increase in consumption tax from 8 percent to 10 percent in October last year.

Colowide became Ootoya's largest shareholder in 2019 by purchasing shares from a member of the founding family.

==Kyodo

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