Japanese-style set-menu eatery chain operator Ootoya Holdings Co. said Monday it opposes a takeover bid by its largest shareholder and major restaurant chain owner Colowide Co.

"There is no future for Ootoya if it becomes a subsidiary of Colowide," said Ootoya President Kenichi Kubota at a press conference, after its board decided to oppose the bid by Colowide to increase its stake to 51.32 percent from the current 19.16 percent by spending up to 7.1 billion yen ($66.2 million).

Colowide, which runs "izakaya" pubs, Gyukaku grilled beef restaurants and karaoke bars, has been hit hard by the coronavirus pandemic as fewer people dine out.

"It is questionable whether it would have sufficient financial and human resources to improve the corporate value of Ootoya," Kubota said.

He rejected immediate countermeasures such as seeking a "white knight" friendly investor but added, "I am open to talks with any company for a possible alliance that could bring synergies to both sides."

Colowide launched the takeover bid on July 10 with an Aug. 25 deadline. It offered 3,081 yen per share, a sizeable markup on the Ootoya share price, which ended at 2,113 yen on July 8, the day before the bid was announced.

On Monday, shares of Ootoya ended at 2,934 yen, down nearly 2 percent from Friday.

The focus is on how individual shareholders of Ootoya, who together own around 60 percent of the company, will respond to the bid.

Colowide has said it will rebuild loss-making Ootoya by cutting costs and improving procurement and food distribution systems.

Both companies operate overseas, with Colowide currently managing 227 restaurants in 12 countries and regions, including Southeast Asia, Canada and the United States. Ootoya operated 105 eateries across eight countries and regions as of March 2018, including 45 in Thailand, 32 in Taiwan and four in the United States.

Due to the pandemic, 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.

Colowide also fell into the red in fiscal 2019. It became Ootoya's largest stakeholder last year by purchasing shares from a member of the founding family.

==Kyodo

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