July 17, 2020 / 1:27 AM / 22 days ago

UPDATE 1-Japan's Ootoya says to formally oppose Colowide's takeover bid

(Adds response from Colowide, Ootoya shares)

TOKYO, July 17 (Reuters) - Restaurant chain Ootoya Holdings said it would oppose a takeover offer from its top shareholder, Colowide Co, turning the bid into the Japan's latest hostile deal.

In an emailed statement, Ootoya said it would announce on Friday that a group of employees were against the takeover, followed by a formal decision on Monday by the board of directors to oppose the bid.

Ootoya shares rose over 3% to 2,949 yen ($27.50) after the news, while the broader market was slightly down.

Colowide last week offered to buy Ootoya at 3,081 yen a share in a deal that would boost its stake in the company to 51.32% from 19.16%.

Japanese companies are increasingly seeking more control of affiliates to streamline operations.

A spokesman for Colowide, which runs several restaurants from izakayas to sushi chains, said the company does not have any immediate comments on Ootoya's plan to oppose the bid.

Ootoya has criticised the offer, saying it came as a surprise given Colowide knew the majority of shareholders opposed such a move.

The bid also follows Colowide's failed attempt to install candidates to Ootoya's board - a proposal rejected at the annual shareholders' meeting last month. ($1 = 107.2500 yen) (Reporting by Junko Fujita; Editing by Chang-Ran Kim and Himani Sarkar)

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