Toyota Motor Corp declared on Saturday that it is exploring multiple possibilities, including making a partial investment in a $42 billion buyout deal for Toyota Industries Corp, a major supplier of automotive components. The decision comes amid reports of a possible acquisition that could lead to a restructuring of the company’s overall corporate framework.
In its Tokyo Stock Exchange filing, the automaker stated that it is considering multiple options while stressing that no final decision has been reached.
Toyota Industries, the parent company of Toyota Motor before its separation in 1937, is the world’s largest forklift manufacturer. In addition to its leadership in material handling, it produces textiles and essential automotive components, such as engines and hybrid-vehicle batteries, with a market value of 28 billion. Toyota Industries confirmed receiving offers to transition into a private company but clarified that neither Toyota Chairman Akio Toyoda nor the Toyota group had proposed any of them.
According to a Reuters report, two sources revealed that Toyota Industries is evaluating funding options for the potential buyout, seeking financial backing from Toyota, its affiliated companies, and major banks. They also emphasized that the proposal did not come from Akio Toyoda or the Toyota group.
If completed, the buyout could dismantle long-established cross-shareholdings within the Toyota group, leading to a transparent corporate governance framework.
By September 2024, Toyota Motor held a 24% stake in Toyota Industries, while Toyota Industries owned 9.07% of Toyota Motor’s shares and 5.41% of Denso, another key supplier for Toyota.
Toyota Industries faced a significant reputational setback in 2024 after revelations that it had misrepresented the horsepower ratings of certain engines. The controversy resulted in the suspension of ten Toyota vehicle models.
Recently, regulators have raised concerns about Toyota Industries’ structure, questioning whether it shields management from shareholder influence.
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