Japanese electrical appliance store chain Yamada Denki Co. will buy a majority stake in Otsuka Kagu Ltd. to make the struggling furniture retailer a subsidiary, the two companies said Thursday.
Yamada Denki will buy 4.37 billion yen ($40 million) worth of new shares to be issued by Tokyo-based Otsuka Kagu through a third-party allotment later this month, acquiring a 51.74 percent stake with voting rights, they said.
The move comes as the Japanese furniture retailer was unable to turn around its financial position after a sales slump and closure of its outlets due to a worsening brand image stemming from a family feud over control of the company.
Since Yamada Denki and Otsuka Kagu agreed on a business tie-up in February this year, the furniture retailer has provided personnel and furniture sales expertise to the electronics chain, which has started focusing on its housing arm.
The retailer posted a net loss of 3.2 billion yen for the fiscal year ended in December 2018, mired in the red for the third consecutive year.
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