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Toyota Motor’s largest subsidiary received a 4.7 tonne ($33 billion) take private proposal, including 1 billion yen in Akio Yoda’s personal money, in a deal to rebuild Japan’s biggest business empire.
Toyota Industries, the world’s largest automaker’s leading parts manufacturer by sale, said on Tuesday it received an offer of 16,300 yen per 16,300 yen from a special purpose company supported by Toyota Motor and another company in the wider Toyota Group.
The offer is 11.4% below Toyota Industries’ closing price of 18,400 yen on Tuesday, but represents a 23% premium from the price before management interest was made public on April 25th.
Toyota Group is a collection of 18 companies, including Carmaker, and holds stakes in each other. This is my favorite ownership model that has been the subject of corporate governance reform efforts. The acquisition unravels one of the group’s biggest cross-share holdings and sets the Japanese tone for other companies.
According to a company’s spokesperson, the amount paid to Toyota Industry is 4.7tn. These figures include nearly 25% stakes worth Toyota Motor will be acquired by Toyota Industries through stock buybacks at a later stage.
The Toyota Group said a new holding company has been established and Toyota Motor has invested around 700 million yen in non-voting shares. Toyota Fudosan, a private real estate group chaired by Toyoda, will also contribute 180 billion yen in addition to individual investment in chairs.
Toyota itself, Toyota Motor and Toyota Fudosan will eventually become three owners of the holding company, simplifying ownership in the Toyota industry.
Parts suppliers Aisin and Denso will abandon their shares in Toyota Industries and unlock the cross-share holding network. Toyota Motor will also buy back the 9% stake Toyota Industries has in the automaker.
Regulators and Japanese stock exchanges are urging companies to cut back on mutual stocks and so-called parent-child lists where both large corporations and their subsidiaries are listed publicly.
The Toyota Industries board said it would support the Take Private proposal, when the holding company is set up and open to public offerings in December.
The deal is taking a step forward with a drive to corporate governance reform in Japan, but some analysts have warned of lack of transparency in their assessments.
“There is minimal transparency about how advisors come up with fair value. There are usually a few. Beyond that, the company plans to dramatically change its balance sheet by selling most of its Cross Holding nearby,” said independent analyst Travis Landy. “Many moving parts are not explained very much.”
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Toyota Industries’ net debt is 1.7tn, the spokesman said it has lifted the Enterprise’s value by more than 6°.
Three Toyota Group companies involved in the transaction said: “Through this privatization, the Toyota industry intends to deepen collaboration within the Toyota Group, move these activities forward dynamically and quickly, leading the way in the mobility sector.”
Toyota Industries is the world’s largest forklift producer and was founded in 1926 by Akio Yoda’s grandfather, Yoda Yoda. It developed the automotive division, spin-off, and later became Toyota Motor.
