U.S.-based Fortress Investment Group will launch a tender offer from next week for all of Unizo's shares at 4,000 yen apiece ($37.68), the companies said in separate statements, trumping the 3,100 yen that H.I.S. has offered.
Unizo has publicly opposed the H.I.S. bid, saying it lacked synergy and undervalued the hotel chain.
The Nikkei daily earlier reported that the hotel operator had sought help from Fortress as a 'white knight'.
This represents an unusual counter-offensive in Japan, where M&A offers tend to be pre-agreed deals waiting to be rubber-stamped and hostile bids like that of H.I.S. remain rare.
"Our board of directors has decided to support the Fortress Group bid ... and encourages shareholders to tender their shares," Unizo said in a statement on Friday.
Fortress said it was seeking a minimum 66.67% stake and would drop the bid if it did not secure that.
H.I.S., which owns 4.79% in Unizo, launched a tender offer last month to raise its stake to as much as 45%.
A spokesman for H.I.S. said it was examining Fortress's bid and would make an announcement if it takes any new measures.
U.S. hedge fund Elliott has been gradually raising its stake in Unizo and now holds 9.9%, regulatory filings show.
The U.S. activist investor is known for buying stakes in companies in the midst of an acquisition and forcing better terms for minority shareholders.
Unizo shareholders should welcome Elliott's intervention because it has already contributed to improving the hotel chain's share price since the fund's ownership surfaced on Aug. 6, said Stephen Givens, a Tokyo-based corporate lawyer.
A Hong Kong-based representative for Elliot declined to comment on its Unizo stake.
Fortress built its footprint in Japan by snapping up troubled hotels in the wake of the 2008 financial crisis when most investors shunned the sector.
Buying out Unizo, which operates limited-service hotels across Japan, would complement Fortress's strategy. The investment firm controls Mystays Hotel Management Company, which operates hotels similar to the type Unizo runs.
Unizo shares closed up 16% at 4,165 yen on Friday, before the Fortress bid was announced. That was more than a third above H.I.S.' offer and just above the Fortress offer price.
(Reporting by Chris Gallagher and Junko Fujita; Additional reporting by Antoni Slodkowski and David Dolan; Editing by Muralikumar Anantharaman and Himani Sarkar)
By Junko Fujita