Following the Toyota Group’s reported 4.7 trillion yen ($33 billion) plan to take the firm private, shares of Toyota Industries fell as much as 13% on Wednesday. According to Reuters, this involves a $26 billion tender offer for Toyota Industries shares at 16,300 yen each, which is much less than the 18,400 yen it ended at on Tuesday before the announcement of the agreement.
For the transaction, the Toyota Group will establish a new holding company, in which Toyota Motor Chairman Akio Toyoda will invest one billion yen, and Toyota Fudosan, the group’s real estate division, will invest around 180 billion yen. Toyota Motor will invest about 700 billion yen in preferred shares that do not have voting rights. Loans from MUFG Bank, Mizuho Bank, and Sumitomo Mitsui Banking Corporation will support further funding.
This transaction follows a larger trend in Japan where companies are under increasing pressure from investors and regulators to sever long-standing cross-shareholding relationships. The Financial Services Agency of Japan has been advocating for less cross-shareholding agreements.
Although its size won’t give him complete control over Toyota Industries, Satoru Aoyama, head of corporate ratings at Fitch Ratings in Japan, told CNBC that Toyota’s investment is probably symbolic and would strengthen the group’s cohesiveness.
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