Toyota Motor will take its key affiliate Toyota Industries private in a $33 billion deal, a landmark transaction that unwinds decades of cross-shareholding and strengthens the founding Toyoda family's grip on Japan's most powerful corporate group. The buyout, announced Tuesday, includes a tender offer of ¥16,300 per share, representing an 11% discount to Toyota Industries' closing price before the deal was made public.
The transaction, led by Toyota Motor Chairman Akio Toyoda, includes backing from the country's top banks and contributions from several Toyota Group companies. It is one of the largest buyouts in Japanese history and comes as the government intensifies pressure on conglomerates to improve corporate governance and transparency by dismantling cross-holdings.
A new holding company will be created for the acquisition. Toyota Fudosan, chaired by Toyoda and functioning as the family's investment vehicle, will invest ¥180 billion. Toyota Motor will contribute ¥700 billion in non-voting preferred shares, and Toyoda himself will invest ¥1 billion personally.
"The chairman's involvement isn't about control over the business," said Kenta Kon, former CFO of Toyota Motor and a key executive across Toyota Group entities. "It's about commitment - to the deal and to Japan."
Toyota Motor, along with affiliates Aisin, Denso, and Toyota Tsusho, will sell their shares in Toyota Industries as part of the transaction, and in turn, buy back shares in their own companies currently held by Toyota Industries. This will dissolve mutual ownership ties and reduce the group's complex internal web of holdings.
The announcement confirmed earlier reports and follows Toyota's April statement that it was considering a potential buyout of Toyota Industries. The company, a top global manufacturer of forklifts and auto components, was founded in 1926 by Sakichi Toyoda. It later spawned the automotive division that became Toyota Motor.
Despite the strategic rationale, the pricing has drawn sharp criticism from some investors. "The tender offer price is very low compared to our estimate of intrinsic value," said David Mitchinson, chief investment officer at Zennor Asset Management LLP, a shareholder in Toyota Industries. "This is a deal for the Toyota group, not one for Toyota Industries shareholders."
Toyota Industries shares closed Tuesday at ¥18,400, well above the offer price, after gaining more than 40% since news of a potential buyout surfaced in April. Media reports had speculated the tender could reach ¥42 billion-significantly higher than the ¥4.7 trillion value disclosed.
Masatoshi Kikuchi, chief equity strategist at Mizuho Securities, said the discounted offer "leaves a bitter taste," especially amid a broader push in Japan to improve shareholder returns.
