TOKYO -- Leading Japanese travel agency H.I.S. is launching a tender offer for real estate developer Unizo Holdings, hoping to expand hotel operations as price competition dims the prospects for its mainstay business.
H.I.S., known for its robot-staffed Henn na Hotels, on Wednesday announced plans to purchase up to 40% of Unizo's shares by spending as much as 42.7 billion yen ($394 million).
The travel group is offering 3,100 yen a share, about 30% above Unizo's closing price on Wednesday. The offer will be open from Thursday to Aug. 23.
H.I.S. said it requested a meeting with Unizo several times between December and April to discuss potential capital and business partnerships. But Unizo, which operates various hotels and office buildings across Japan, did not respond, spurring H.I.S. to acquire its current 4.79% stake in the company. It is already the leading shareholder in Unizo.
"We do not see this as a hostile move," H.I.S. Chairman and CEO Hideo Sawada said at a news conference in Tokyo on Wednesday.
"Unizo's know-how will greatly benefit us in various ways," he said, stressing that the global tourism boom will lift hotel demand for some time.
In a statement released Wednesday, Unizo said, "The announcement of this tender offer was made unilaterally and abruptly, without any notice."
The developer said it will comment publicly on the offer soon. Depending on the response, Unizo could find itself facing a hostile takeover bid.
H.I.S. currently earns about 60% of group operating profit from the travel business. But its profit margin remains at a slim 1.8% since the commissions on hotel and plane bookings come to only a few percent.
Travel agencies also face growing competition from cheap bookings available on online platforms like Expedia. JTB, another Japanese brick-and-mortar player, logged a 15.1 billion yen net loss for the fiscal year ended in March.
H.I.S. has pursued alternative income sources under Sawada. It turned Huis Ten Bosch, a Dutch-inspired theme park in Nagasaki Prefecture, into a subsidiary in 2010, and opened a robot-staffed Henn na Hotel there in 2015.
The company now operates 33 hotels in Japan and abroad, and is aiming to eventually hit the 100 mark. These facilities have enjoyed rising revenue from the tourism boom.
Meanwhile, Unizo owns 25 business hotels across Japan. H.I.S. hopes to tap the company's know-how and to develop synergies, such as by directing its travel customers to Unizo hotels.
Unizo's shares are undervalued with a price-to-book ratio of 0.7, below the threshold of 1, as of Wednesday. When factoring in its roughly 136 billion yen in unrealized profit from rental properties, the ratio is actually closer to 0.3.