Toyota Group has reached a landmark agreement with activist investor Elliott Investment Management to take Toyota Industries private, paving the way for the largest acquisition in Japanese corporate history. Shares of Toyota Group listed in Japan closed up 3.11% on Monday following the news. Toyota and its affiliated companies are now offering 20,600 yen per share for the remaining shares of Toyota Industries and have extended the tender offer deadline to March 16. The new offer values the target company at 6.7 trillion yen (approximately $42.8 billion), representing a 9.6% increase over the previous bid.
Toyota Group initially announced its intention to privatize Toyota Industries in June of last year, with a first offer of 16,300 yen per share, which translated to a deal value of about 4.7 trillion yen at the time. The tender offer, originally scheduled to begin last December, was postponed due to delays in antitrust approval processes across various countries. Toyota Industries had also requested a higher price in December, citing limited chances of the deal's success. Under pressure from minority shareholders, Toyota Group retracted its earlier firm stance and raised its offer to 18,800 yen per share in January.
However, Elliott, which holds approximately 5% of Toyota Industries, remained opposed to the privatization plan at that time. The firm urged other minority shareholders to reject the offer, arguing that Toyota Industries could achieve greater value by remaining independent. Elliott stated in a public letter that the intrinsic net asset value per share of Toyota Industries was as high as 26,000 yen, significantly exceeding the revised offer of 18,800 yen. Consequently, the latest increased offer from Toyota Group effectively resolves the high-profile standoff with Elliott. Elliott has now agreed to the new terms, describing them as a "superior outcome for minority shareholders" and stating that the deal will "help unwind cross-shareholdings within Toyota Group and across the broader Japanese market."
This development indicates that Japan's push to reform its entrenched corporate structures and strengthen shareholder rights is creating conditions for open price discussions. Meanwhile, the extension of the tender offer period will give Toyota Group more opportunity to secure investor support and potentially complete the transaction through a squeeze-out. The price increase is contingent on Toyota Group securing financing from banks supporting the acquisition, including Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, and Mizuho Financial Group.
A Kyoto University professor with a background in mergers and acquisitions noted, "There is no doubt that Elliott has secured a substantial return. For Toyota Group, completely withdrawing the offer was not a viable option, so reaching an agreement is highly significant." If completed, this acquisition will be the largest in Japanese corporate history. An automotive analyst described the situation as a "win-win" for both sides, stating, "Toyota will face a larger financing burden but achieves its ultimate goal of privatizing Toyota Industries. Elliott, while selling below the target price it advocated for or its accumulated entry price, can still exit at a valuation significantly higher than before."
Upon completion of the acquisition, Toyota Industries will be controlled by the unlisted real estate firm Toyota Fudosan, whose chairman is Akio Toyoda, also the chairman and former CEO of Toyota. Although Akio Toyoda is the grandson of the automaker's founder, his direct stake in the company is less than 1%. Toyota Industries, however, holds a 9.1% stake in Toyota, both directly and indirectly. This acquisition will increase Akio Toyoda's stake and influence within the broader Toyota Group.
Founded nearly a century ago by Toyota Group founder Sakichi Toyoda, Toyota Industries is a leading global manufacturer of forklift trucks and a key supplier of engines to Toyota. It began as a loom manufacturing company, forming the origin of the Toyota Group, with one of its spin-off enterprises later evolving into the world's largest automaker. After decades of reinforcing close ties within the group through cross-shareholdings, Toyota Group has recently faced pressure from the Japanese government to unwind these relationships to improve shareholder returns. This privatization of the founding business also serves as a test case for the effectiveness of the Japanese government's corporate governance reforms.
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