Toyota Group Kicks Off Shareholding Rationalisation With $33 Billion Deal

Japan's Toyota Group on Tuesday announced that one of its key units, Toyota Industries Corporation, will go private after 76 years of being publicly listed in Tokyo. To facilitate this, the founding family and several group companies — including Toyota Motor Corporation — will participate in a 4.7 trillion yen ($33 billion) buyout deal.

The move comes amid growing criticism from the Japanese government and regulators over the group’s complex web of cross-shareholdings among affiliates and partner companies. In April, the Financial Times reported that Japan’s authorities have been pushing companies to improve corporate governance. The Tokyo Stock Exchange is also working to reform so-called “parent-child listings,” where a large company controls a publicly listed subsidiary.

“Through this privatisation, Toyota Industries intends to deepen collaboration within the Toyota Group, dynamically and swiftly advance these activities, and lead the way in the mobility sector, particularly in the movement of goods,” the company said.

How Toyota Industries Will Be Delisted

Under the terms of the deal, Toyota’s unlisted real estate arm, Toyota Fudosan, will launch a tender offer for Toyota Industries’ shares worth 3.7 trillion yen ($26 billion), the companies said in a joint statement. Separately, Toyota Motor said it would buy back its own shares currently held by Toyota Industries.

As of September last year, Toyota Motor owned around 24% of Toyota Industries, while Toyota Industries held about 9% of Toyota Motor and over 5% of Denso — another major supplier within the Toyota Group.

Other core Toyota Group companies — including Aisin Corporation, Denso Corporation, and Toyota Tsusho Corporation — will also participate in the buyout of all publicly traded shares of Toyota Industries. Once completed, Toyota Industries will no longer be a listed company.

The group said that a large portion of the funding for the deal will come from the sale of Toyota Industries shares currently held by Toyota Motor, Akio Toyoda, and Toyota Fudosan — shares they have owned since the company was first listed in 1949.

As part of the restructuring, Toyota Motor, Aisin, Denso, and Toyota Tsusho will sell their holdings in Toyota Industries. Simultaneously, Toyota Industries will repurchase the shares it holds in those four companies. This will unwind the longstanding cross-shareholding structure, simplifying the group’s ownership model and increasing transparency, the statement said.

Toyota Motor will continue supporting Toyota Industries by holding non-voting preferred shares even after the company becomes private.

Additionally, the Toyota Group plans to establish a new holding company. Toyota Fudosan, which is owned by other Toyota Group firms, will invest about 180 billion yen to support the transition. Akio Toyoda, Chairman of Toyota Motor and grandson of the company’s founder, will personally invest 1 billion yen, while Toyota Motor plans to invest 700 billion yen in preferred shares — a special class of non-voting stock.

A company spokesperson told Bloomberg that buyers from the Toyota Group will require a total of around 4.7 trillion yen ($32.9 billion) for the deal.