Toyota Group last week increased its acquisition offer for its subsidiary Toyota Industries by 15% to 18,800 yen per share, up from the initial 16,300 yen per share proposed in June 2025. Goldman Sachs stated that Toyota Group's decision to raise the bid for Toyota Industries will boost foreign investor confidence in the Japanese stock market, as it demonstrates a stronger commitment to protecting minority shareholder rights. Goldman Sachs' chief Japan equity strategist, Bruce Kirk, remarked, "I don't think many investors or market participants anticipated Toyota Group would take such action. The fact that they did is remarkable in itself. Foreign investors will be more willing to engage with the Japanese market, knowing there is a greater likelihood their rights as minority shareholders will be protected." Goldman Sachs strategists described Toyota Group's increased offer for Toyota Industries as an "extremely significant development" within Japan's corporate governance reforms. Corporate governance reform has been a key driver of the Japanese stock market's gains over the past three years. Further progress in capital efficiency and stronger protection for minority shareholders could position Japanese equities more favorably and attract additional global investors. Furthermore, Goldman Sachs raised its 12-month target for the Topix index to 3,900 from a previous 3,600, implying a 6.7% increase from Monday's closing level. Toyota Group announced its tender offer to take Toyota Industries private last June, with an initial offer valuing the deal at approximately 4.7 trillion yen, representing an 11% discount to its market value at the time. The offer, originally scheduled to commence last December, was postponed due to delayed approval processes by antitrust regulators in various countries, and Toyota Industries had requested a higher price last December, citing limited chances of deal success. Under significant pressure from Toyota Industries' minority shareholders, Toyota Group retracted its earlier statement about holding the line and ultimately decided to increase the offer. Following the revised bid, Toyota Industries' valuation has risen to 6.1 trillion yen. However, activist investor Elliott Investment Management, which holds about a 5% stake in Toyota Industries, remains opposed to the privatization proposal. The firm is also urging other minority shareholders to reject the offer, arguing that Toyota Industries could achieve greater value by remaining independent. In a public letter, Elliott stated that Toyota Industries' intrinsic net asset value is as high as 26,000 yen per share, far exceeding the revised acquisition offer of 18,800 yen from Toyota Group. Despite the price increase lifting Toyota Industries' valuation to 6.1 trillion yen (approximately $390 billion), debate over the company's fair valuation persists. Elliott's public letter also outlined an independent operational development plan, suggesting that by divesting cross-shareholdings, integrating business segments, optimizing capital allocation, and advancing governance reforms, Toyota Industries could boost its per-share value to over 40,000 yen by 2028. Elliott emphasized in the letter, "Through optimized operational efficiency and capital allocation, Toyota Industries has a clear path to unlocking value independently, making the current privatization transaction unnecessary." Goldman Sachs strategists view the ongoing actions by Elliott and the high level of investor engagement as positive developments. He stated, "This is not just a story about an activist investor in action; it represents genuine shareholder participation aimed at securing a fair outcome for minority shareholders. This situation quite clearly demonstrates that significant changes have occurred in the Japanese market for such events to unfold."
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