Summary
- Deal unwinds cross-shareholding as Japan eyes better governance
- Tender offer at 16,300 yen/share below Tuesday’s closing price
- Media reports had suggested deal value of around $42 billion
TOKYO, (Reuters) – Toyota Motor will take forklift-maker Toyota Industries (6201.T), opens new tab private in a $33 billion deal, the companies said on Tuesday, a landmark unwinding of cross-shareholding that is likely to strengthen the influence of the group’s founding Toyoda family.
Going private will allow Toyota Industries to take a longer-term business perspective, the companies said. Japanese conglomerates are under increasing pressure to unwind stakes in each other as part of a government push for better governance.
“It streamlines the cross-shareholdings a bit within the group,” said Vincent Sun, a senior analyst at Morningstar. “We think it makes sense for Toyota Motor to have a stake in Toyota Industries to leverage on any potential autonomous (logistics) technology in the future.”
The total acquisition cost for the Toyota Group will be around 4.7 trillion yen ($33 billion), a spokesperson said. That includes a $26 billion tender offer for shares of Toyota Industries at 16,300 yen apiece, well below the closing price of 18,400 yen on Tuesday before the deal was announced.
A new holding company will be set up for the deal, the companies said. 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.
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 Group is focusing on the movement of people, goods, information, and energy as it progresses towards transforming into a mobility company,” the companies said, adding that Toyota Industries would focus on the transport of goods.
While the deal was widely expected, the price may come as something of a shock. Media reports had indicated the tender offer would be around $42 billion, a 62% premium to the actual offer.
Toyota had said in April it was considering participating in a potential buyout of Toyota Industries.
Toyota owned about 24% of Toyota Industries as of September last year, while Toyota Industries held around 9% of the world’s biggest automaker and more than 5% of Denso.
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.
($1 = 142.6500 yen)
($1 = 142.8500 yen)
Reporting by David Dolan. Additional reporting by Adwitiya Srivastava in Bengaluru and Mariko Katsumura in Tokyo. Editing by Edwina Gibbs and Mark Potter
Source: worldautoforum.com
