Toyota Strikes Deal to Privatize Toyota Industries
Toyota has reached an agreement with activist investor Elliott Investment Management to take its affiliate, Toyota Industries, private. The deal was struck after Toyota raised its initial offer, concluding a push by Elliott to restructure the subsidiary.
The final agreement, valued at approximately $30 billion, was reached after Toyota increased its offer to 20,535 yen per share. This was a significant jump from the initial bid of 16,300 yen per share made in late 2024, which many investors, including Elliott, felt undervalued the company. Elliott had argued for a price above 26,000 yen per share, highlighting the company's true worth. Toyota Industries is not just a subsidiary; it is the parent company from which Toyota Motor Corporation was spun off in 1937. Founded in 1926 as a manufacturer of automatic looms, it has since become the world's largest manufacturer of forklift trucks by revenue. It also produces crucial automotive components like engines and assembles vehicles, including the Toyota RAV4. This deal is a significant move to unwind the complex "cross-shareholding" structures common in Japan. This practice, where companies hold stakes in each other, has been criticized for insulating management from shareholder pressure and hindering efficient use of capital. Elliott's campaign specifically pointed out these issues as a need for reform. The involvement of an activist investor like Elliott Investment Management is part of a growing trend in Japan. Historically, shareholder activism was viewed with hostility, but in recent years, both foreign and domestic investors have been increasingly successful in pushing for changes in corporate governance and unlocking shareholder value at major Japanese corporations.
