Toyota chairman proposes record buyout of its supplier at $42 billion valuation

Yahoo

26-04-2025

(Bloomberg) — Toyota Motor Corp. Chairman Akio Toyoda has proposed a buyout of Toyota Industries Corp., people familiar with the matter said, seeking to consolidate his grip on Japan's biggest business empire as a wave of merger and acquisition activity roils the country.
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The proposal values Toyota Industries, which makes looms for textile manufacturing as well as parts for Toyota's cars, at ¥6 trillion ($42 billion), one of the people said, a roughly 40% premium over its market capitalization at the close Friday.
Toyota Industries, the company founded by Toyoda's great-grandfather Sakichi that ultimately birthed the world's No. 1 carmaker, formed a special committee after receiving the proposal and hired advisers to review its viability, the people said, asking not to be identified because the information isn't public.
Although Akio is chairman of Toyota Motor, his direct ownership of the company stands at less than 1%, while Toyota Industries has a 9.1% stake in the carmaker. The buyout would bolster Akio's holding and influence over the broader Toyota group, which includes suppliers and stakes in other businesses, including rival carmakers.
A deal would rank among the biggest buyouts on record globally. Discussions are still ongoing and the deal may not proceed in its current form, or at all.
In a statement, Toyota Motor said it was considering various possibilities, including a partial investment in Toyota Industries, but nothing has been decided. Toyota Industries said in an emailed statement that it's considering all possibilities, including capital policies, to enhance the corporate value of the group, but no decisions have been made.
The Toyota Industries buyout proposal comes months after the collapse of a similar bid to take Japanese retailer Seven & i Holdings Co. private.
Led by its founding Ito family, that plan's failure due to lack of funding has raised the chances of a takeover by Canadian rival Alimentation Couche-Tard Inc. The liberalization of capital flows in the country, along with a push for greater governance and accountability to shareholders, has challenged longstanding ties between management and stakeholders that emphasized stability.
'While we have seen the unwinding of cross-shareholdings within the Toyota group over the past two years, we have been focusing on Toyota Industries as the 'final boss' of corporate governance reforms,' Masahiro Akita, a Tokyo-based equity analyst at Bernstein, said in a note reacting to Bloomberg's report. 'Increasing regulatory and market focus on corporate governance should trigger a realignment of the parent-subsidiary listing structure, including Toyota and Toyota Industries.'
If the Toyota Industries bid proceeds, financing will comprise of personal investment by Akio Toyoda, along with loans from Mitsubishi UFJ Financial Group Inc. and Japan's other megabanks, said one of the people.
Akio, 68, stepped aside as Toyota Motor's chief executive officer in 2023 after leading the family business for 14 years, handing the job over to then-Lexus chief Koji Sato. Even so, the grandson of the carmaker's founder wields outsize influence over the company.
In recent years, however, Toyota Motor shareholders' support for Toyoda has dwindled. More than a quarter of votes cast opposed his reappointment, partly over the company's handling of vehicle-safety certifications. His share of affirmative votes dropped to 72%, from 85% and 96% in the prior two years.
For all that resistance, Toyoda's insistence that Toyota stay the course with a 'multi-pathway' strategy that leaves room for gas-electric hybrid powertrains is paying off. The company has extended its lead as the world's top-selling carmaker as the broader industry's transition to fully electric vehicles slows. At ¥42.5 trillion, Toyota is the world's second-most valuable auto company, after Tesla Inc.
It's not clear whether a successful buyout of Toyota Industries would change Toyoda's participation on the carmaker's board. While now smaller and lower-profile than the auto giant, Toyota Industries has a hallowed position in the Toyoda family lore.
Its history goes back 135 years, when Sakichi improved upon loom designs to manufacture textiles, which at the time were an important export for Japan. His son, Kiichiro, founded Toyota Motor in 1937.
The two companies are still deeply intertwined. Toyota Motor and its affiliates own about 38% of the shares in Toyota Industries, while Toyota Fudosan Co., the real estate company that counts Akio as its chairman, owns 5%.
—With assistance from Alastair Gale and Santosh Nair.
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