TOKYO (Reuters) – U.S. private equity firm Blackstone Group (BX.N) has raised its proposed offer for Unizo Holdings (3258.T) by 12% to 191.6 billion yen ($1.75 billion), topping a rival bid from U.S. buyout fund Lone Star that is backed by the Japanese hotelier.

Blackstone said on Tuesday its improved proposal was worth 5,600 yen a share, up from 5,000 yen previously. It comes ahead of a Feb. 4 deadline for the public tender offer at 5,100 yen launched by Lone Star.

With its sweetened proposal, Blackstone is challenging Unizo’s shareholders to pressure the management, who are accountable for giving better returns to them amid a government push for better corporate governance.

“Blackstone believes that the revised Blackstone offer is the best option for shareholders to maximize the value of their shares as well as the best means for enhancing Unizo’s corporate value,” the U.S. fund said in a statement, adding it would only launch its offer with Unizo’s support.

A Unizo spokeswoman declined to comment on Blackstone’s revised proposal. Unizo’s shares closed at 5,190 yen, before the new proposal was announced.

Unizo’s top shareholder is U.S. hedge fund Elliott Management, which has built up a 13.14% stake in the company since August.

Elliott in October expressed concerns about Unizo’s governance and pushed it to accept Blackstone’s earlier offer, after the Japanese firm had rebuffed Blackstone as well as other unidentified bidders.

Elliott now has the right to call for an extraordinary shareholders meeting as it has held its stake for more than six months, the condition needed in Japan to make such a request.

Japanese asset manager Ichigo Management has also built up a 9.28% stake in Unizo, which has attracted bidders because its shares are trading below the estimated value of its assets.

Unizo in July was the target of a hostile bid by Japanese travel agent H.I.S. Co (9603.T). Unizo at one stage turned to U.S. buyout firm Fortress Investment Group to fend off that bid. But later it withdrew its support for Fortress’ offer.

While Blackstone tried to win over Unizo management following its initial approach in October, the Japanese firm turned to Lone Star, agreeing to create an entity that would be 73% owned by Unizo employees and 27% by Lone Star.

Under that deal, Lone Star would provide as much as 175 billion yen of financing to the entity and gain the right to control 99.99% of Unizo’s voting rights indirectly. Unizo said it is unlikely Lone Star would exercise that right.

Unizo has backed Lone Star’s offer and said if the deal was successful, all board members and other executives, including Chief Executive Tetsuji Kosaki, would resign.

However, Unizo has not explained how an entity majority owned by employees would be run.

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