Toyota Industries receives $33 billion buyout offer from group companies

The deal includes a tender offer for Toyota Industries shares at ¥16,300 each, 11% below its last closing price

By Nicholas Takahashi

 

Toyota Industries Corp. said it received a $33 billion offer to take the company private in a move that could lead to the founding family strengthening its grip over Japan’s biggest business empire. 

The deal will involve a tender offer for the shares of the supplier of textile looms, forklifts and parts for Toyota Motor Corp.’s cars for ¥16,300 a share, which is 11 per cent below Toyota Industries’ closing price on Tuesday. The total amount required for the acquisition by the Toyota Group is around ¥4.7 trillion ($32.9 billion), a company spokesperson said.

 

A new holding company will be established to privatise Toyota Industries, the company said in a statement. Investment in the holding company will include ¥180 billion from Toyoda Fudosan Co., ¥700 billion from Toyota Motor in the form of non-voting preferred shares, and a personal investment of ¥1 billion from Toyota Motor Chairman Akio Toyoda. 

 

A deal, which would rank among the biggest buyouts on record anywhere, would resolve a parent-child structure that has been criticised in the past, and also be in line with the Japanese government’s efforts to encourage big companies to unwind cross-held shares with subsidiaries and other businesses. At the same time, a takeover may give Toyoda greater influence over the carmaker founded by his grandfather.

 

In addition to the investments, Toyota Motor and its suppliers Aisin Corp., Denso Corp. and Toyota Tsusho will sell their shares in Toyota Industries and acquire their own shares held by Toyota Industries. 

 

“This will dissolve the cross-shareholding between Toyota Industries and those four companies, except Toyota Motor will continue to invest in Toyota Industries in the form of preferred shares mentioned above,” it said.

 

 

Shares in Toyota Industries rose less than 1 per cent in trading in Tokyo on Tuesday. The stock is up more than 40 per cent since Bloomberg first reported the takeover proposal on April 25. 

 

Toyota Industries was founded by Toyoda’s great-grandfather Sakichi, whose son Kiichiro went on to found Toyota Motor, which has become the world’s biggest carmaker with annual production of more than 11 million vehicles. 

 

The parties involved have picked financial advisers and are working toward a tender offer as soon as November, people familiar with the matter have said. A special board committee, created to evaluate the proposal as per government guidelines, is evaluating the buyout proposal by a special purpose vehicle established by Toyoda. 

 

Toyota Industries will hold its annual shareholder meeting on June 10, while Toyota Motor’s will take place two days later.

 

 

There’s a complex web of cross-shareholdings among Toyota group companies with Toyota Motor holding 24.2 per cent of Toyota Industries’ shares, while Toyota Fudosan Co., a private real estate developer chaired by Toyoda, owns 5.32 per cent of the supplier. 

 

Japan is accelerating efforts to unwind such arrangements among companies, aiming to improve corporate governance, enhance transparency and boost shareholder returns. 

 

Toyoda’s buyout plan comes as Toyota seeks to rebuild trust in its governance after a series of regulatory scandals were uncovered at a pair of subsidiaries that included Toyota Industries.