Home improvement retailer Shimachu Co. on Friday accepted a takeover bid by furniture and interior goods chain operator Nitori Holdings Co., which has offered to buy at a higher price than DIY rival DCM Holdings Co., as they seek to survive in a shrinking Japanese market.

Shimachu had backed DCM's offer and the about-face means Nitori will not have to launch a hostile takeover bid, which is uncommon in corporate Japan. By becoming a wholly owned subsidiary in the latest case of cooperation beyond sectors, Shimachu hopes to use Nitori's networks and expertise for longer-term growth.

Nitori is offering 5,500 yen ($52) per Shimachu share from Monday to Dec. 28, in a roughly 214 billion yen buyout. That is higher than the 4,200 yen offered by DCM, which has already launched a friendly takeover bid through Monday. Shimachu shares ended Friday at 5,510 yen.

Shimachu has about 60 shops, mainly in urban areas, while Nitori has around 560 in Japan and 67 overseas.

The benefits of choosing Nitori, which has a different business model as a furniture and interior goods retailer, outweighed those of working with competitor DCM whose DIY stores overlap, creating the possibility of "quick synergy," Shimachu President Takaaki Okano said.

"We have come to believe that (Nitori) will make us bigger over the medium to long term," Okano told a press briefing. "As is seen by the offering price, (Nitori) values us highly."

Shimachu on Friday withdrew its earlier decision to support DCM's bid.

The coronavirus pandemic has prompted a rethink among retailers already facing the prospect of a shrinking consumer base in aging Japan.

Nitori, known for its affordable furniture, is seizing the opportunity to bolster its business, benefiting from growing demand for household furnishings as people spend more time at home.

"We have completely agreed on our goals," Akio Nitori, chairman of the furniture chain, told the briefing.

==Kyodo

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