Toyota Motor Corporation has raised its offer price for supplier Toyota Industries Corporation to 20,600 yen ($132) per share, valuing the bid at roughly $30 billion and ending a months-long standoff with activist investor Elliott Investment Management, which had pushed for a higher price.
Elliott said it had agreed to tender its shares in the forklift maker, also known as TICO, calling the raised offer an “improved outcome” for minority shareholders. The price is nearly 10% above Toyota’s previous bid of 18,800 yen and follows an original June offer of 16,300 yen, both of which Elliott had rejected as too low.
The fund, alongside other minority shareholders, had argued that the earlier bids undervalued TICO. Elliott had previously said the shares were worth more than 26,000 yen each.
“The stand-off between Paul Singer’s fund – one of the world’s most prominent shareholder activists – and Toyota, the world’s top-selling automaker, has been closely watched as a test case for Japan’s push to improve corporate governance,” analysts said.
Travis Lundy of Quiddity Advisors, who publishes on the Smartkarma platform, noted that Elliott’s decision to tender effectively makes the bid a “done deal,” though he called the higher price a “disappointing outcome.” He added, “At no time did Toyota ever admit that the structure was designed in a way which might have been done better.”
As part of the deal, TICO will unwind its holdings in other Toyota companies, addressing concerns over cross-shareholding practices that have long been criticised for insulating management from investors.
“Cross-shareholdings have long been an unresolved issue within the Toyota Group, and this is an extremely significant development for the market,” Kenta Kon, who is seen as the architect of the buyout, said at a briefing.
The Asian Corporate Governance Association, together with around two dozen investors, had previously raised concerns about the buyout, citing inadequate financial disclosure and arguing that Toyota group companies should not be classified as minority shareholders, which lowers the voting threshold required to clinch the deal.
Toyota has consistently rejected such criticism, stating that it has taken multiple steps to ensure the bid was transparent, including consulting outside directors and obtaining three fairness opinions.
Founded in 1926 as Toyoda Automatic Loom Works, TICO later added an automobile division, spun off as Toyota Motor in 1937. Toyota has said it wants to take TICO private to remove short-term profit pressures as the group pivots to connected cars and advanced software.
The automaker also said that its latest offer price is contingent on obtaining loan guarantees from its banks.
Boluwatife Enome
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