Toyota to take key supplier private in US$33 billion deal
[TOKYO] Toyota Motor will take forklift-maker Toyota Industries private in a US$33 billion deal, the companies said on Tuesday (Jun 3), a landmark unwinding of cross-shareholding that is likely to strengthen the influence of the group's founding Toyoda family.
Going private will allow Toyota Industries to take a longer-term business perspective, the companies said. Japanese conglomerates are under increasing pressure to unwind stakes in each other as part of a government push for better governance.
'It streamlines the cross-shareholdings a bit within the group,' said Vincent Sun, a senior analyst at Morningstar. 'We think it makes sense for Toyota Motor to have a stake in Toyota Industries to leverage on any potential autonomous (logistics) technology in the future.'
The total acquisition cost for the Toyota Group will be around 4.7 trillion yen (US$33 billion), a spokesperson said. That includes a US$26 billion tender offer for shares of Toyota Industries at 16,300 yen apiece, well below the closing price of 18,400 yen on Tuesday before the deal was announced.
A new holding company will be set up for the deal, the companies said. Group real estate company Toyota Fudosan will invest 180 billion yen, while Akio Toyoda, Toyota Motor's chairman, will invest one billion yen. Toyota Motor will invest 700 billion yen in non-voting preferred shares.
Toyota Motor and group companies Aisin, Denso and Toyota Tsusho will all sell their shares in Toyota Industries and acquire their own shares now held by it.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Sign Up
Sign Up
'Toyota Group is focusing on the movement of people, goods, information, and energy as it progresses towards transforming into a mobility company,' the companies said, adding that Toyota Industries would focus on the transport of goods.
While the deal was widely expected, the price may come as something of a shock. Media reports had indicated the tender offer would be around US$42 billion, a 62 per cent premium to the actual offer.
Toyota had said in April it was considering participating in a potential buyout of Toyota Industries.
Toyota owned about 24 per cent of Toyota Industries as of September last year, while Toyota Industries held around 9 per cent of the world's biggest automaker and more than 5 per cent of Denso.
Toyota Industries, formerly Toyoda Automatic Loom Works, was founded in 1926 by Sakichi Toyoda to make automatic looms. An automotive division within the company was set up and later spun off as Toyota Motor. REUTERS
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Times
2 hours ago
- Business Times
Court partially allows Goh Jin Hian's appeal, finds he did not breach duty by not probing IPP's red flags
[SINGAPORE] The Appellate Division of the High Court has partially allowed an appeal by Goh Jin Hian against having to pay damages for breaching his duty of care as a then-director of the insolvent marine fuel supplier, Inter-Pacific Petroleum (IPP). The ruling on Thursday (Jun 5) said that Goh had breached his duty of care as a result of not being aware of IPP's cargo trading business – not because he had failed to open a probe into red flags surrounding the company. The justices presiding were Tay Yong Kwang, Woo Bih Li and Kannan Ramesh. Goh was also found not to have breached his duty to act in the best interests of IPP's creditors regarding drawdowns on bank facilities in relation to fraudulent cargo trades. This follows his being found liable in February 2024 for breaching of his director's duties, statutory duties and the losses suffered by the firm, which came to US$146 million plus interest. The liquidators of IPP had sued Dr Goh, the son of former prime minister Goh Chok Tong, to recover US$156 million in losses, accusing him of 'sleepwalking through his time as a director' and failing to discover and stop the drawdowns in trade financing between June 2019 and July 2019, said to have been funding non-existent or sham transactions. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up In his grounds of decision released last July, High Court Justice Aedit Abdullah said Dr Goh had not taken 'reasonable steps', such as by making the necessary inquiries, when red flags surrounding the company arose. Goh was also unaware of the existence of IPP's cargo trading business, despite being a director of the company, and therefore did not know this business was a fraudulent scheme perpetrated by IPP, said the justice. Following the appeal, the judgement has been set aside, and Dr Goh no longer has to pay damages to IPP. While the Appellate Division agreed with the previous judgement that Goh had breached his duty of care by being unaware of IPP's cargo trading business, it found that the three red flags raised in the previous judgement were not 'red flags that would have put Dr Goh on a train of inquiry leading to the fraud in the cargo trading business being uncovered'. One such red flag was an audit confirmation request relating to amounts of receivables due to IPP from customer Mercuria Energy Trading, which Goh signed and was sent to Mercuria on Feb 7, 2018. The sum due was US$132 million. While Justice Aedit said Goh should have made inquiries upon receiving the audit confirmation request, the Appellate Division said the fact that this sum was requested by Mercuria was 'not, in and of itself, enough to put him on inquiry'. This was because Mercuria was a big company and that the size of the receivable could have been explained by IPP's sizeable trading volume, amounting to about US$1 billion, with it. Two other issues that IPP's liquidators had called red flags – the suspension of IPP's bunker craft operator licence in June 2019 and three confirmations of indebtedness signed by Dr Goh in July 2019 – were also found not to be red flags by the Court of Appeal. In the case of the suspension, 'even if Dr Goh had made the inquiries... it is unclear if he would have uncovered fraud in the cargo trading business, even if he had learned that IPP was carrying on such business'. The judges were not persuaded that the suspension of the licence was a red flag. As for the confirmation of indebtedness, there was no assertion in the confirmations that the debts were for the cargo trading business, and they were thus not considered red flags. The Appellate Division therefore departed from Justice Aedit's finding that Dr Goh breached the care duty regarding the red flags. It also disagreed with Justice Aedit that Dr Goh did not breach his duty to act in the best interests of the respondent's creditors on the drawdowns for fraudulent cargo trades made on IPP's bank facilities. It found that IPP bears the legal burden of proving that the fraud would have been detected, and that the resulting loss would have been averted had Dr Goh known that IPP was undertaking the cargo trading business, but failed to discharge this burden. Dr Goh was represented by TSMP Law Corporation, led by joint managing partner Thio Shen Yi; IPP's liquidators were represented by LVM Law Chambers, led by managing director Lok Vi Ming. After the appeal, Thio said the decision has practical implications for all directors, as the Court of Appeal has clarified that it 'cannot be part of a director's duty of supervision and oversight to pick up fraud unless there are tell-tale warning signs'. 'Directors owe fiduciary obligations and the duty of care to the company, but the Appeals Court has crucially recognised the practical and commercial limits to their ability to scrutinise for and detect fraud, especially deep-seated fraud,' he added.
AsiaOne
2 hours ago
- AsiaOne
American group distributing aid in Gaza delays reopening sites, World News
CAIRO/JERUSALEM — A controversial private company distributing aid in Gaza, backed by the US and Israel, had yet to reopen its distribution sites in the enclave by mid-morning on Thursday (June 5), a day after shutting them following a series of deadly shootings close to its operations. The US-based Gaza Humanitarian Foundation had said on Wednesday that its sites would not reopen at their usual time due to maintenance and repair work. It did not say when the locations would reopen. A Palestinian father of four in Gaza's Khan Younis, who asked not to be identified over safety concerns, told Reuters the GHF site in nearby Rafah had not reopened by mid morning. GHF did not immediately respond to a request for comment. [[nid:718722]]
Business Times
2 hours ago
- Business Times
Appeals Court partially allows Goh Jin Hian's appeal, finds he did not breach duty by not probing IPP's red flags
[SINGAPORE] The Court of Appeal has partially allowed an appeal by Goh Jin Hian against having to pay damages for breaching his duty of care as a then-director of the insolvent marine fuel supplier, Inter-Pacific Petroleum (IPP). The court ruled on Thursday (Jun 5) that Goh had breached his duty of care as a result of not being aware of IPP's cargo trading business – not because he had failed to open a probe into red flags surrounding the company. The justices presiding were Tay Yong Kwang, Woo Bih Li and Kannan Ramesh. Goh was also found not to have breached his duty to act in the best interests of IPP's creditors regarding drawdowns on bank facilities in relation to fraudulent cargo trades. This follows his being found liable in February 2024 for breaching of his director's duties, statutory duties and the losses suffered by the firm, which came to US$146 million plus interest. The liquidators of IPP had sued Dr Goh, the son of former prime minister Goh Chok Tong, to recover US$156 million in losses, accusing him of 'sleepwalking through his time as a director' and failing to discover and stop the drawdowns in trade financing between June 2019 and July 2019, said to have been funding non-existent or sham transactions. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up In his grounds of decision released last July, High Court Justice Aedit Abdullah said Dr Goh had not taken 'reasonable steps', such as by making the necessary inquiries, when red flags surrounding the company arose. Goh was also unaware of the existence of IPP's cargo trading business, despite being a director of the company, and therefore did not know this business was a fraudulent scheme perpetrated by IPP, said the justice. Following the appeal, the judgement has been set aside, and Dr Goh no longer has to pay damages to IPP. While the Court of Appeal agreed with the previous judgement that Goh had breached his duty of care by being unaware of IPP's cargo trading business, it found that the three red flags raised in the previous judgement were not 'red flags that would have put Dr Goh on a train of inquiry leading to the fraud in the cargo trading business being uncovered'. One such red flag was an audit confirmation request relating to amounts of receivables due to IPP from customer Mercuria Energy Trading, which Goh signed and was sent to Mercuria on Feb 7, 2018. The sum due was US$132 million. While Justice Aedit said Goh should have made inquiries upon receiving the audit confirmation request, the Court of Appeal said the fact that this sum was requested by Mercuria was 'not, in and of itself, enough to put him on inquiry'. This was because Mercuria was a big company and that the size of the receivable could have been explained by IPP's sizeable trading volume, amounting to about US$1 billion, with it. Two other issues that IPP's liquidators had called red flags – the suspension of IPP's bunker craft operator licence in June 2019 and three confirmations of indebtedness signed by Dr Goh in July 2019 – were also found not to be red flags by the Court of Appeal. In the case of the suspension, 'even if Dr Goh had made the inquiries... it is unclear if he would have uncovered fraud in the cargo trading business, even if he had learned that IPP was carrying on such business'. The judges were not persuaded that the suspension of the licence was a red flag. As for the confirmation of indebtedness, there was no assertion in the confirmations that the debts were for the cargo trading business, and they were thus not considered red flags. The Court of Appeal therefore departed from Justice Aedit's finding that Dr Goh breached the care duty regarding the red flags. The Court of Appeal also disagreed with Justice Aedit that Dr Goh did not breach his duty to act in the best interests of the respondent's creditors on the drawdowns for fraudulent cargo trades made on IPP's bank facilities. It found that IPP bears the legal burden of proving that the fraud would have been detected, and that the resulting loss would have been averted had Dr Goh known that IPP was undertaking the cargo trading business, but failed to discharge this burden. Dr Goh was represented by TSMP Law Corporation, led by joint managing partner Thio Shen Yi; IPP's liquidators were represented by LVM Law Chambers, led by managing director Lok Vi Ming. After the appeal, Thio said the decision has practical implications for all directors, as the Court of Appeal has clarified that it 'cannot be part of a director's duty of supervision and oversight to pick up fraud unless there are tell-tale warning signs'. 'Directors owe fiduciary obligations and the duty of care to the company, but the Appeals Court has crucially recognised the practical and commercial limits to their ability to scrutinise for and detect fraud, especially deep-seated fraud,' he added.
