Latest news with #ZennorAssetManagement
Nikkei Asia
2 days ago
- Automotive
- Nikkei Asia
Toyota Industries buyout is undervalued: UK asset manager
LONDON -- Minority shareholders are set to lose out on Toyota group's bid for Toyota Industries because the tender offer is at a "really low price," according to the co-founder of British investment firm Zennor Asset Management. "Toyota Motor is getting a different deal, a much better deal, than other shareholders," said David Mitchinson, a founding partner at Zennor, which hold shares in Toyota Industries. "What they're getting out of this deal is quite different than what minority shareholders are receiving."
Asharq Al-Awsat
2 days ago
- Business
- Asharq Al-Awsat
Toyota Industries Sinks after Parent's Takeover Bid Misses Expectations
Investors gave a thumbs-down to Toyota Motor's $33 billion take-private offer for Toyota Industries on Wednesday, highlighting concerns minority shareholders would be short-changed in a landmark restructuring for Japan Inc. Shares of Toyota Industries, a key Toyota Group company, fell 12% in Tokyo trade a day after the world's top-selling automaker unveiled plans to take the subsidiary private. The complex 4.7 trillion yen ($33 billion) transaction includes an offer price of 16,300 yen a share for Toyota Industries. While that represents a 23% premium to the price before word of the deal broke in April, it is well below the 18,400 yen price before the offer was formally announced. Shares closed at 16,205 yen on Wednesday. "To be clear, we welcome the attempt to clear up the parent-subsidiary governance issue. We don't like the price," said David Mitchinson, founding partner and chief investment officer of Zennor Asset Management, which owns Toyota Industries shares, Reuters reported. When asked if Zennor would tender its shares, he said: "We will have to see how this develops as there seems strong opposition from many shareholders". The deal will see a number of Toyota Group companies unwind cross-shareholdings, something Japanese regulators and the Tokyo Stock Exchange have long urged for better governance. Toyota Industries has been one of Japan's most prominent examples of so-called "parent-child listings", where both a parent company and its subsidiary are listed. Governance experts say such cases are inherently unfair to minority shareholders and a drag on corporate value. Still, the transaction comes up short in terms of corporate governance, as it both undervalues Toyota Industries' substantial real estate holdings and strengthens the founding Toyoda family's control over the broader group, market participants said. "There's huge hidden asset value in the land and other holdings at Toyota Industries. And the price should have been much higher," Nicholas Benes, a governance expert and the CEO of the Board Training Institute of Japan, told a briefing on Wednesday. The deal was a "prime example" of a squeeze-out of minority shareholders at an unfair price by founders and management, he said. In a statement, Toyota Motor said the interests of Toyota Industries' minority shareholders were being considered. "Taking into account shareholder returns and the tax benefits for Toyota Industries, we have adopted a share buyback scheme" through a tender offer, it said. It said the deal was part of a broader realignment of capital structures within the Toyota Group as it moved toward becoming a mobility company. A new holding company will be set up for the deal. Group real estate company Toyota Fudosan will invest 180 billion yen, while Akio Toyoda, Toyota Motor's chairman, will invest 1 billion yen. Toyota Motor will invest 700 billion yen in non-voting preferred shares. Media reports had indicated the tender offer would be around $42 billion, a substantial premium to the actual offer. 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. Toyota owned about 24% of Toyota Industries as of September last year, while Toyota Industries held around 9% of the automaker and more than 5% of Denso. Toyota Industries, formerly Toyoda Automatic Loom Works, was founded in 1926 to make automatic looms. An automotive division within the company was set up and later spun off as Toyota Motor.
Japan Times
21-05-2025
- Automotive
- Japan Times
Toyota Industries investor Zennor says it wants minority safeguards
Toyota Industries investor Zennor Asset Management said a plan by Toyota Motor Chairman Akio Toyoda to take over the Japanese auto parts maker raises governance issues and may undermine minority shareholders' interests. David Mitchinson, founding partner at Zennor, said the reported ¥6 trillion ($41 billion) buyout plan would benefit the founding family and may undervalue the target's stock and real estate holdings. Mitchinson suggested other options, including a potential takeover led by Toyota Motor. Toyota Industries, the company founded by his great grandfather, formed a special committee and hired advisers to review the proposal, it was reported last month. Local media on Monday reported that Toyota Industries is set to accept the offer, and the bid will likely be announced in May or June, triggering a jump in its shares the next day. "There has to be a sufficient economic alignment for people to say this deal is fair and we're at a reasonable level, as opposed to this being really discounted and just a friendly deal to make Akio have more control over Toyota Motor,' said Mitchinson. Zennor holds more than 350,000 shares in Toyota Industries, he said. A recent wave of buyouts in Japan has raised concerns about unfair valuations. The Tokyo Stock Exchange announced in February that it will require listed companies to disclose real estate values and cross shareholdings in go-private deals. The outcome of the Toyota Industries deal will serve as a litmus test for the protection of minority shareholders' interest at a time when buyout activities are intensifying in Japan. Toyota Motor is "examining the optimal approach' regarding its holdings in Toyota Group shares, but no decisions have been made, a spokesperson said. Toyota Industries did not immediately respond to a request for comment. Mitchinson said that fair valuation of all the assets need to be considered, adding that real estate values on their balance sheet are likely to be understated. Toyota Industries' unrealized gains in Toyota Motor shares will burden the family with a tax liability, pushing down the price of the takeover, according to Mitchinson. If Toyota Motor bought out the company, instead, it would benefit the broader shareholder base as the capital gains taxes could be exempted by canceling the shares, resulting in a higher valuation. Mitchinson's view stands in contrast to Dalton Investments, which supports the plan, celebrating it as a turnaround in Japanese companies prioritizing shareholders. Toyota Industries held about 9.1% stake in Toyota Motor as of last September, according to a statement by the latter. It held ¥1.54 trillion in property, plant and equipment assets as of March 31, according to its financial statement. Tatsuo Yoshida, a Bloomberg Intelligence senior auto analyst, said that while there is a risk the takeover would turn management into a black box, risking transparency and independence, the company could be "less susceptible to short-term pressure from external investors and the market.' "We are not against this potential transaction, in principle, but it should not result in a transfer of value to Akio or Toyota Motor,' Mitchinson said, cautioning that much of the information on the plan has come out via media reports and is uncertain. "It may be the best outcome for Akio but it's not necessarily the best outcome for external shareholders.'
