[TOKYO] Toyota Industries said its board will evaluate a buyout proposal on Tuesday (Jun 3) that will take the company private, a move that will strengthen the founding family’s grip over Japan’s biggest business empire.
A group led by Toyota Motor chairman Akio Toyoda is seeking to acquire the subsidiary for six trillion yen (S$42 billion), sources familiar with the matter said last month. Toyota Industries issued a statement on Tuesday in response to reports that the deal will be announced, saying that no specific decisions have been made public.
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.
“This matter is scheduled to be discussed at its board of directors meeting to be held today, and the decision made will be promptly disclosed,” Toyota Industries said.
Toyoda will put in a personal investment of his own, as will Toyota Motor, according to the sources. Although Akio is chairman of the world’s No 1 carmaker, his direct ownership stands at less than 1 per cent, while Toyota Industries has a 9.1 per cent stake in the manufacturer.
Shares in Toyota Industries rose less than 1 per cent in early morning trading in Tokyo on Tuesday. The stock is up more than 40 per cent since Bloomberg first reported the takeover proposal on Apr 25.
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Toyota Industries, the supplier of textile looms, forklifts and parts for Toyota’s cars, 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 towards a tender offer as soon as November, sources 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 Jun 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, 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. BLOOMBERG
