Japanese fast-food group Colowide has succeeded in its hostile bid for home-style dining chain Ootoya, Japanese media reports said, as a generous premium persuaded investors to set aside worries that a takeover would hurt the company’s food quality.

Colowide, which owns several large-scale restaurants including barbecue chain Gyu-Kaku, has amassed a stake of around 46% in Ootoya including the 19% it previously owned, according to the Nikkei and other local media on Tuesday.
Colowide declined to confirm the result of the bid, saying it would make an announcement on Wednesday morning.

The proxy battle between the restaurant rivals, part of a growing trend of hostile deals in Japan’s traditionally consensus-driven business culture, attracted headlines because of Ootoya’s popularity.

It specialises in traditional Japanese fare described as “home-style” but too time-consuming for many people to cook themselves, such as fried cod and grilled vegetables in a black vinegar sauce, served with miso soup and rice.

Colowide offered to buy the shares at 3,081 yen per share, a 46% premium to their earlier value. Colowide initially struggled to persuade Ootoya shareholders, around 60% of whom are mom-and-pop investors, and extended its tender offer deadline last month.

Colowide has said it wants to promote more efficiency by introducing the chain to its network of central kitchens, a key component of fast-food chains seeking to maximise economies of scale.
Ootoya has said such a system would hurt quality and lessen its appeal to customers.

Ootoya, however, has also faced pressure from rising labour and food costs, as well as prolonged fears about the coronavirus pandemic which has hurt sales.

Reuters