Toyota to take private key unit in US$26 billion deal
TOKYO: Toyota Motor will take private a key supplier of its group, it said on Tuesday, in a US$26 billion deal, marking a landmark repositioning of Japan's most important corporation.
Under the terms of the deal, unlisted real estate company Toyota Fudosan will launch a tender offer for shares of Toyota Industries for 3.70 trillion yen (US$26 billion), the companies said.
Separately, Toyota said it plans to buy back its own shares from Toyota Industries.
Japanese companies have come under growing scrutiny from the market regulator and investors in recent years about their cross-shareholdings in affiliates and business partners, sparking a rise in both management buyouts and acquisitions.
Many of the deals have been driven by expectations that a corporate governance overhaul will bring better shareholder returns.
Toyota had said in April it was considering participating in a potential buyout of Toyota Industries – a move that sources have said would help improve the group's corporate governance.
Toyota owned about 24 per cent of Toyota Industries as of September last year, while Toyota Industries held around nine per cent of the world's biggest automaker and more than five per cent of Denso, another major Toyota supplier and Toyota group company.
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.
In addition to forklifts, Toyota Industries manufactures the RAV4 sport utility vehicle for Toyota and also produces car parts such as engines, air-conditioning compressors, batteries and converters.
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