Toyota Industries Shares Plunge on $33 Billion Buyout Deal
Toyota Industries experienced a significant stock drop, plummeting as much as 13% following the Toyota Group's announcement of a 4.7 trillion yen ($33 billion) buyout offer to take the company private. The offer includes a tender of $26 billion for Toyota Industries shares at 16,300 yen each, according to Reuters, lower than the previous closing price.
Details of the Buyout
The Toyota Group plans to establish a new holding company, with Toyota Fudosan investing approximately 180 billion yen and Toyota Motor Chairman Akio Toyoda investing 1 billion yen. Toyota Motor will also invest 700 billion yen in non-voting preferred shares. Financing is supported by loans from Sumitomo Mitsui Banking Corporation, MUFG Bank, and Mizuho Bank.
Background and Analysis
This development aligns with a broader trend in Japan, where companies face pressure to reduce cross-shareholding ties. Fitch Ratings' Satoru Aoyama noted that Toyoda's investment symbolizes group unity, recalling past cross-shareholding strategies to protect Toyota Industries from acquisition threats.
An analyst from SmartKarma, Arun George, suggested the offer might be unattractive, highlighting that the offer price was below the midpoint of the valuation range given by financial advisors. The special committee negotiated multiple times, but was rebuffed when requesting a higher offer. Toyota Industries, which founded Toyota Motor, manufactures forklifts, engines, electronic components, and stamping dies.