Toyota Industries is being acquired by Akio Toyoda for a sum of $33 billion.
In a significant move, Toyota Group is spearheading a large-scale privatization of Toyota Industries, one of Japan's largest corporations. The initiative, led by Toyota Fudosan under the leadership of Akio Toyoda, aims to dissolve cross-shareholdings and enable Toyota Industries to focus on long-term strategic goals, free from market pressures [1][4].
The deal, valued at 4.8 trillion yen ($33 billion), includes a tender offer to take Toyota Industries private. Toyota Fudosan is investing approximately 180 billion yen ($1.26 billion), with Akio Toyoda personally contributing 1 billion yen ($6.97 million). Additionally, Toyota Motor will invest an extra 1 trillion yen in nonvoting preferred shares [1].
The privatization move has raised some concerns among investors, particularly regarding potential undervaluation and corporate governance issues. However, the sources do not explicitly report investor alarm about these matters [4][5]. Nonetheless, given the scale and involvement of major Toyota group entities, the deal is likely under close scrutiny by investors.
Akio Toyoda's personal investment signifies a strong commitment from the Toyota group side, but private ownership may raise concerns about reduced public oversight. The new holding company created for the deal will serve as an investment vehicle for the Toyoda family [1].
The offer price for Toyota Industries includes a premium over the company's share price before the deal was made public. However, the discounted tender offer has been criticized by activist investors such as Masatoshi Kikuchi, chief equity strategist at Mizuho Securities, who finds the discount concerning [6].
David Mitchinson, director of investments at Zennor Asset Management, believes the deal's terms undervalue Toyota Industries. He expresses concerns about the corporate governance of Toyota Industries, a concern shared by others [7].
The privatization could eliminate the "parent-subsidiary" structure criticized by the Tokyo Stock Exchange and activist investors, potentially strengthening Akio Toyoda's influence over Toyota Industries and its group companies [8]. However, Kent Conrad, a key figure in Toyota Motor, denies that the privatization of Toyota Industries is related to Toyota's control over the business [9].
Toyota Industries' shares are expected to be sold at 16,300 yen ($113.6), representing a 11% decrease from the closing price on June 3. The news about the planned deal was first reported by Japanese media outlets Kyodo and Nikkei in May [10].
As the deal progresses, investors and stakeholders will be closely watching the developments, particularly with regards to valuation fairness and corporate governance standards. The privatization of Toyota Industries marks a significant step in the strategic repositioning of one of Japan's most influential corporations.
- The new holding company established for the privatization of Toyota Industries will serve as an investment vehicle for the Toyoda family, with Akio Toyoda personally investing a significant amount.
- The deal to take Toyota Industries private, which includes a discounted tender offer, has been criticized by activist investors such as Masatoshi Kikuchi and David Mitchinson, who have expressed concerns about the undervaluation of Toyota Industries and corporate governance standards.
