Toyota Motor shocked investors with a ¥4.7 trillion ($33 billion) bid to buy the rest of Toyota Industries and take it private. The offer sits below Tuesday’s share price, sending the stock tumbling and raising cries that smaller investors are being short-changed.
Sudden Jolt on the Trading Floor
Wednesday morning in Tokyo started with gasps. Toyota Industries’ share price sank more than 12 percent, landing at ¥16,135, under the ¥16,300 cash offer Toyota Motor put on the table. The drop wiped billions from the company’s market value in minutes. Only days earlier, local papers had floated a far richer valuation of around ¥6 trillion, luring hedge funds hunting a takeover premium.
What the Deal Looks Like
Toyota wants to scoop up the 55 percent of Toyota Industries it does not own and then remove the firm from the stock market. A fresh holding company will fund most of the purchase. Real-estate arm Toyota Fudosan will supply nearly all the cash, chairman Akio Toyoda will add a symbolic personal stake, and Toyota Motor will buy ¥700 billion in non-voting preferred shares.
Shareholders Are Upset
The offer is 11 percent below Tuesday’s close and far beneath the richer price that media chatter hinted at. Funds that bought shares expecting a fat premium feel short-changed, saying the bid ignores valuable land holdings and Toyota Industries’ global leadership in forklifts and compressors.
Toyota’s Bigger Plan
Executives say a private structure will free engineers to tackle long-term projects, robot-powered warehouses, next-generation battery equipment, and other tools that may take years to pay off but are vital to Toyota’s push into electric and self-driving vehicles.
Bigger Concerns for the Market
Japan’s stock exchange has urged companies to respect minority investors and unwind cozy cross-shareholdings. Critics warn that letting this discount deal sail through could slow that progress, giving other conglomerates an excuse to squeeze out small shareholders at bargain prices.
The tender offer opens later this month and is expected to last about four weeks. If enough investors tender their shares, Toyota Industries will leave the exchange it joined in 1949. Global investors will be watching closely.
