Japan’s H2O Nearing Deal to Buy Kansai Super Controlling Stake

Japanese department store operator H2O Retailing Corp. is nearing a deal to increase its stake in grocery store owner Kansai Super Market Ltd. and make it a subsidiary, according to people familiar with the matter.

A transaction could see Kansai Super Market issue new shares that H2O Retailing would purchase, giving it ownership of more than 50% of the company, the people said, asking not to be identified as the information is private. The deal could be announced as early as this week, they said.

The two companies entered discussions after Kansai Super rejected an offer in June from OK Corporation, which operates discount supermarkets in the Tokyo region, the people said. There’s still a potential that OK, which also owns a 7.2% stake in the company, may launch another bid for Kansai Super, they said.

Details of the transaction could change and the deal could still fall apart, the people said. Representatives for H2O and Kansai Super did not immediately respond to requests for comment. A spokesman for OK Corporation told Bloomberg that the company has made takeover bids in the past, but not this year.

Kansai Super has a market value of about 42 billion yen ($384 million) as of the close of trading on Monday.

H2O currently holds a 10% stake in Kansai Super and is its largest shareholder. H2O is best known for its department stores around Osaka, Japan’s second largest metropolitan region, though it also has a supermarket business that could be complemented by Kansai Super’s strength in sales of fresh foods and daily necessities.