In a potential move that could reshape its operations, Toyota Motor Corporation has announced it is exploring the idea of investing in a massive $42 billion buyout of its key parts supplier, Toyota Industries Corporation.
The news came after Toyota filed a disclosure with the Tokyo Stock Exchange on Saturday, stating that it is considering “various possibilities, including partial investment” in the proposed deal. This follows reports from Bloomberg suggesting that Toyota Chairman Akio Toyoda, along with the founding Toyoda family, had proposed a buyout worth around 6 trillion yen ($42 billion).
Toyota Industries, which currently has a market value of about 4 trillion yen, acknowledged that it had received proposals related to going private through a special purpose company. However, it denied receiving any formal offer from Toyota’s chairman or the wider Toyota group.
Sources close to the matter, who requested anonymity, revealed that Toyota Industries is contemplating securing funding from Toyota, its group companies, and major banks to finance the potential buyout. These sources emphasized that the buyout proposal did not originate directly from Akio Toyoda or Toyota Motor Corporation.
The aim of the buyout would be to untangle complex cross-shareholdings within the Toyota group — a move seen as a way to strengthen corporate governance and focus more effectively on long-term growth strategies. Cross-shareholding, a common practice among Japanese companies, has been under increasing scrutiny by regulators and shareholders who argue that it can shield management from shareholder accountability.
Currently, Toyota Motor owns 24% of Toyota Industries, while Toyota Industries holds 9.07% of Toyota and 5.41% of Denso, another critical Toyota supplier. Toyota Industries has already begun unwinding some of its cross-shareholdings by selling off stocks, including shares in Aisin Corporation, another core supplier.
Analysts believe that taking Toyota Industries private would allow it to invest more aggressively in future technologies and projects without being constrained by shareholder expectations for short-term returns.
Toyota Industries, originally founded as Toyoda Automatic Loom Works in 1926 by Sakichi Toyoda, has played a vital role in Toyota’s history. It manufactures forklifts, builds the popular RAV4 SUV, and produces engines for Toyota Motor.
As of now, both Toyota Motor and Toyota Industries have stressed that no final decisions have been made regarding the buyout plan. However, the possibility of such a monumental move has captured the attention of the automotive and investment worlds alike.
Stay tuned for more updates as this story unfolds.
