Japanese staffing firm United Technology Holdings said on Friday it had bought 30 percent of scandal-hit rival Goodwill Group Inc for $120 million, setting the stage for a potential battle with U.S. fund Cerberus and Morgan Stanley for control of the firm.

The announcement by United Technology comes a little over a week after Goodwill said Cerberus and investment bank Morgan Stanley would take large stakes by buying new shares and swapping debt for equity. Goodwill has run foul of regulators on several occasions and was forced to sell its nursing care business, a key unit, after the government refused to renew operating licences because it had inflated staff numbers. United Technology said it did not plan to increase its stake further at this point and it wanted talks with Goodwill, Morgan Stanley and Ceberus on capital and business tie-ups. The company, which provides workers for semiconductor and flat panel display factories, said it had not contacted Goodwill, Cerberus or Morgan Stanley before buying the shares on the open market for about $120 million from February 1 to March 19.

"We are a small company and not famous. We had doubts that our proposals would ever make it to the table unless we showed a big commitment," said United Technology spokesman Kuninori Akita. A Goodwill spokesman declined to comment on the matter, saying the firm was studying United Technology's announcement. A spokeswoman at Morgan Stanley in Tokyo declined to comment while a spokesman for Cerberus in Hong Kong could not be reached for comment. Goodwill said last week that loans owed to its main bank, Mizuho Financial Group, would be sold to a consortium of Cerberus and Morgan Stanley, and that 15.5 billion yen of that debt will be converted into preferred shares.

Goodwill also unveiled plans to issue about 4.5 billion yen worth of new shares to the consortium, which could see Cerberus and Morgan Stanley owning 46 percent of the firm if all the preferred shares are converted into common stock. ($1=99.44 Yen)