In a significant move, Toyota Motor is contemplating a $42 billion buyout of its key supplier, Toyota Industries. This potential acquisition, which could be financed through Toyota group companies and major banks, aims to take Toyota Industries private via a special purpose company. The proposal, reportedly suggested by Toyota Chairman Akio Toyoda and his family, seeks to improve corporate governance by unwinding cross-shareholdings and strengthening long-term strategies. However, Toyota Industries has denied receiving any such proposal from Akio Toyoda or the Toyota group. Both companies have stated that no decisions have been finalized, and they are exploring various options, including partial investment.
The proposed buyout comes amid growing pressure from regulators and shareholders for Japanese companies to reassess traditional cross-shareholding practices. Toyota holds a 24% stake in Toyota Industries, which in turn holds 9.07% in Toyota and 5.41% in Denso. Founded in 1926, Toyota Industries has evolved from manufacturing looms to producing forklifts, RAV4 SUVs, and engines for Toyota Motor. If the deal proceeds, it could mark a significant shift in the automotive industry's corporate structure, potentially leading to more streamlined operations and enhanced shareholder value.