TOKYO Japan's largest discount home electronics retailer Yamada Denki (9831.T) plans to spend more than 10 billion yen ($126 million) to take a controlling stake in smaller rival Best Denki (8175.T), the Nikkei business daily reported.
The move would cement Yamada Denki's No.1 position in the industry at a time of consolidation in the face of intense competition and price cutting.
Yamada Denki already has a 7.5 percent stake in Best Denki and planned to boost its holding to more than 50 percent, the newspaper said, although it would keep Best Denki's shares listed.
Shares in Best Denki were briefly suspended before the market opened. They jumped 10.4 percent to 170 yen in morning trade.
Yamada Denki said in a statement it had nothing to announce at present. Its shares rose 1.8 percent to 3,635 yen.
In May, consumer electronics retailer Bic Camera agreed to buy rival Kojima for 14 billion yen to become the No.2 retailer behind Yamada.
Bic Camera, which has a 15 percent stake in Best, which has sales of more than 2 trillion yen a year, was expected to cancel a business alliance with Best after Yamada's takeover, the Nikkei said.
(This version of the story has been corrected to show Yamada Denki shares were not suspended)
($1 = 79.6600 Japanese yen) (Reporting by Junko Fujita; Editing by Richard Pullin and Michael Perry)