October 2, 2019 / 9:19 AM / 17 days ago

Fortress extends offer on Japan's Unizo after being jilted as white knight

(This October 2 story is refilled to correct Reuters Instrument Codes, paragraph 1)

By Junko Fujita

TOKYO (Reuters) - SoftBank-backed (9984.T) Fortress Investment Group said on Wednesday it had extended its tender offer for Unizo Holdings (3258.T) for a second time, after the Japanese hotel chain abruptly withdrew its support for a $1.3 billion buyout bid.

Fortress’s bid, originally a “white knight” offer, was thrown into doubt last week with Unizo saying Fortress had not met its demands for a higher offer price or its concerns about employment of current staff.

Unizo’s about-face has complicated Fortress’ bid and raised the possibility that the investment group could turn into a hostile bidder. It also marks the latest twist in a fractious deal that began with a separate hostile bid by H.I.S. Co (9603.T) and has drawn in U.S. hedge fund Elliott Management, which now owns around a 10% stake in Unizo.

Fortress said in a public filing it had extended a tender offer deadline to Oct. 17. It also disputed Unizo’s statement that it had not dealt with Unizo’s concerns about employment.

“Unizo and Fortress had agreed to maintain the current employment conditions or improve them,” Fortress said. “Fortress has never suggested it would change this policy”.

A Unizo spokeswoman did not have any immediate comment in response to Fortress.

U.S. ASSETS

Fortress said Unizo had proposed selling U.S. assets to raise 98.2 billion yen ($913 million), to be used by a Unizo-created entity to buy back Unizo shares from Fortress after the tender offer.

Fortress would not be able to change business plans or sell assets without the approval of the entity under the scheme.

Unizo told Fortress it would start negotiations with other potential buyers if the fund did not agree to the proposal, Fortress added.

Unizo said last week it had asked Fortress, which has offered 4,000 yen a share, to raise its price to 5,000 yen. Fortress said such an increase would be difficult, taking into account the sale of U.S. assets.

Shares of Unizo closed at 4,640 yen on Wednesday, indicating investors believe that Fortress may have to raise its bid - or that another suitor could come offer a higher price.

Unizo has also said it received a separate offer from a top global fund, which it had rejected. The unnamed fund offered to buy Unizo at 5,000 yen a share.

Reporting by Junko Fujita; Editing by David Dolan and Kirsten Donovan

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