Restaurant chain Ootoya Holdings , a target of a hostile bid by its largest shareholder, Colowide Co, said on Friday it had allied with online grocery delivery company Oisix Ra Daichi Inc.

Ootoya and Oisix Ra Daichi, a leading online food seller, will develop meals and sell them on each others’ networks, Ootoya said in a statement.

Ootoya is trying to thwart the bid from Colowide, which is aiming to increase its stake in Ootoya to 51.32% from 19.16%, as it tries to diversify revenue sources.

But Ootoya shares have been trading below Colowide’s offer of 3,081 yen a share. Colowide’s bid runs until Aug. 25.

Hostile bids have been rare in Japan. But as corporate growth slows, some companies are seeking greater control over their affiliates by offering a big premium to the affiliates’ market value.
Some financial said a target company’s blocking such an offer was against shareholders’ benefit.

Ootoya’s shares have risen almost 37% to 2,885 yen on Friday morning since July 8, the day before the offer was made.

Ootoya operates restaurants specialising in home made Japanese meals. Colowide runs various types of restaurants, including izakayas, sushi chains and karaoke shops. Online food delivery, including easy-to-make “meal kits”, has gained popularity this year as the coronavirus outbreak discouraged people from shopping in crowded supermarkets.

Oisix is one of Japan’s biggest online food sellers, specialising in organic vegetables. Its main competitors are consumer cooperatives and the growing e-commerce sites of big supermarkets such as Aeon and Seven & i Holdings.

Reuters