Tokyo, March 26 - Japan's Yamazaki Baking Co. Ltd. said it would spend about 16 billion yen ($136 million) to take a 35 percent stake in Fujiya Co., becoming the scandal-hit cake maker's top shareholder.
Earlier this year Fujiya admitted to shipping cream puffs and other products made with ingredients past their expiration dates, forcing the confectioner to shut down its factories and prompting retailers to pull its products from their shelves.
The scandal has tainted Fujiya's brand and damaged its earnings. The cake maker is projecting a group net loss of 6.7 billion yen for the business year ending this month and it plans to pay no dividend.
Fujiya plans to issue about 68 million new shares to Yamazaki at 235 yen a piece, an 18 percent discount to Monday's close of 288 yen. The issue will boost Fujiya's total shares outstanding by 54 percent to over 194 million shares.
Yamazaki, Japan's largest baking company, plans to play a lead role in helping Fujiya restructure.
In a statement, the companies said they would consider working together in several areas including sales, development of new outlets, and distribution.
Fujiya resumed sales of its cakes and other products at some of its roughly 800 outlets last week, though most major retailers have not yet restarted sales.
Fujiya is best known for "Peko-chan", a round-eyed mannequin with a lip-licking grin that has been hawking sweets for the company since it adopted the eternal six-year-old girl as its mascot after the Second World War.