A consortium led by Toyota Motor Corp. Chairman Akio Toyoda is proposing to acquire the subsidiary for ¥6 trillion ($42 billion), according to individuals familiar with the discussions from last month. In response to speculations regarding the announcement of the deal, Toyota Industries released a statement on Tuesday indicating that no definitive decisions have been made public.
This arrangement, which would be among the largest buyouts ever, would address a parent-child structure that has faced scrutiny in the past, aligning with the Japanese government’s efforts to encourage major companies to dismantle cross-holdings with subsidiaries and other organizations. A takeover could also enhance Toyoda’s authority over the automaker established by his grandfather.
“The board of directors meeting scheduled for today will discuss this matter, and any decisions made will be disclosed promptly,” Toyota Industries stated in its announcement.
Toyoda is expected to make a personal investment alongside Toyota Motor, as reported by sources. Although Akio holds the title of chairman of the world’s top car manufacturer, his direct stake is less than 1%, while Toyota Industries retains a 9.1% interest in the manufacturer.
Shares in Toyota Industries saw a slight increase of less than 1% in early trading on Tokyo’s stock exchange on Tuesday. The stock has risen more than 40% since Bloomberg first reported the buyout proposal on April 25.
Founded by Toyoda’s great-grandfather Sakichi, Toyota Industries supplies textile looms, forklifts, and components for Toyota vehicles. His son Kiichiro later established Toyota Motor, which has grown to become the world’s leading carmaker, with annual production exceeding 11 million vehicles.
According to insiders, the involved parties have engaged financial advisers and are preparing for a tender offer potentially as soon as November. A specialized board committee, set up to evaluate the proposal in line with government guidelines, is assessing the buyout plan initiated by a special purpose vehicle established by Toyoda.
Toyota Industries is set to conduct its annual shareholder meeting on June 10, while Toyota Motor’s meeting will occur two days later.
The Toyota group companies operate within a complex network of cross-shareholdings, with Toyota Motor owning 24.2% of Toyota Industries’ shares, and Toyota Fudosan Co., a private real estate firm led by Toyoda, possessing 5.32% of the supplier.
Japan is expediting efforts to dismantle such arrangements among corporations to enhance corporate governance, improve transparency, and increase shareholder returns.
Toyoda’s buyout initiative is being proposed as Toyota works to restore confidence in its governance following a series of regulatory scandals involving two subsidiaries, including Toyota Industries.
