Toyota Industries gets $33bn offer from group cos to take auto firm private, founding family to gain more control—Detail

The board of directors of Toyota Industries Corporation said it has received a $33 billion offer from Toyota Group companies to take the company private, Bloomberg reported on June 3.

The deal, which will involve a tender offer for shares of the conglomerate for ¥16,300 a share — 11 per cent below Toyota Industries’ closing price on June 3 — could solidify the founding family's grip over Japan’s biggest business empire, it added.

Toyota Industries, will go private under a holding company comprised of Toyota Motor and others, the statement said. Sources told Bloomberg that the parties concerned have picked financial advisers and are working toward a tender offer as soon as November this year.

Shares in Toyota Industries rose less than 1 per cent in trading in Tokyo on June 3. The stock has risen over 40 per cent since reports of the buyout were first broken by Bloomberg.

Toyota Industries going private? All you need to know

• The statement added that a new holding company will be established to privatise Toyota Industries. The deal will involve a tender offer for the shares for Toyota Industries' ¥16,300 each.
• Buyers from the Toyota Group will require a total of around ¥4.7 trillion ($32.9 billion) for the deal, a spokesperson told Bloomberg.
• Investment in the holding company will include ¥180 billion from Toyoda Fudosan Co., ¥700 billion from Toyota Motor in the form of non-voting preferred shares, and a personal investment of ¥1 billion from Toyota Motor Chairman Akio Toyoda.
• In addition to the investments, Toyota Motor and its suppliers Aisin Corp., Denso Corp. and Toyota Tsusho will sell their shares in Toyota Industries and acquire their own shares held by Toyota Industries through the tender offers for their treasury shares. .

What issues does the deal resolve? Why is it significant?

If it goes through, this would be among the biggest buyouts on record anywhere in the world.

Notably, it resolves a long-criticised “parent-child” structure between the companies. “This will dissolve the cross-shareholding between Toyota Industries and those four companies, except Toyota Motor, will continue to invest in Toyota Industries in the form of preferred shares mentioned above,” the statement noted.

The measures also align with the Japanese government’s efforts to encourage big companies to unwind cross-held shares with subsidiaries and other businesses. Sources told Bloomberg that a special board committee, created to evaluate the proposal as per government guidelines, is evaluating the buyout proposal by a special purpose vehicle established by Toyoda.

Importantly, the takeover may give Akio Toyoda greater influence over the carmaker founded by his grandfather Kiichiro Toyoda. Toyota Motor is today among the biggest carmakers in the world with annual production of more than 11 million vehicles.

Toyota Industries was founded by Toyoda’s great-grandfather Sakichi. It today supplies textile looms, forklifts and parts for Toyota’s cars.

(With inputs from Bloomberg)