Toyota Motor Corp announced on Saturday that it is evaluating various options, including a partial investment, for a potential buyout of Toyota Industries Corp, a major parts supplier.
This follows reports of a $42 billion deal that could significantly reshape the company’s corporate structure.
In a filing with the Tokyo Stock Exchange, Toyota confirmed it is “exploring various possibilities” regarding the acquisition of Toyota Industries, though no decision has been made.
Bloomberg reported on Friday that Toyota Chairman Akio Toyoda and his family had proposed acquiring Toyota Industries in a deal valued at approximately 6 trillion yen ($42 billion).
However, Toyota Industries, with a market capitalization of around 4 trillion yen, issued a statement denying that it had received any proposal directly from Toyota Chairman Akio Toyoda or the Toyota group.
According to two sources familiar with the matter, Toyota Industries is considering financing the potential buyout with support from Toyota, its affiliates, and major banks.
They also clarified that the proposal did not originate from Akio Toyoda or the Toyota group, as reported by Reuters.
If the buyout goes ahead, it could unravel long-standing cross-shareholdings within the Toyota group, potentially enhancing its corporate governance.
Cross-shareholdings, a common practice in Japan, have been under increasing scrutiny from regulators and shareholders, who argue they hinder transparency and accountability.
As of September 2024, Toyota Motor owned 24% of Toyota Industries, which in turn held 9.07% of Toyota and 5.41% of key supplier Denso.
Toyota Industries has already started selling some of its stakes in affiliated companies like Aisin, in response to growing shareholder pressure to improve returns and streamline its investment strategy.
Founded in 1926 by Sakichi Toyoda as Toyoda Automatic Loom Works, Toyota Industries has grown into a major manufacturing powerhouse.
It produces forklifts, engines, and even the RAV4 SUV for Toyota Motor.
