Toyota says deal to take key supplier private delayed to February or later

Toyota Motor has delayed its 3.7 trillion yen ($24.65 billion) tender offer to take forklift maker Toyota Industries private until February or later, pushing back the previously expected early December launch. This landmark deal, priced at 16,300 yen per share (a 23% premium to pre-deal reports), aims to unwind cross-shareholdings and increase the founding Toyoda family's influence, aligning with Japan's corporate governance reforms. While Toyota defends the offer as fair and strategically beneficial for group synergies, it has drawn criticism from some international investors who argue it undervalues Toyota Industries' real estate assets.

Analysis

TOKYO, Oct 6 (Reuters) - Toyota Motor (7203.T) said on Monday that its tender offer for forklift maker Toyota Industries (6201.T) was now likely to begin in February or later, pushing back a launch that had been expected in early December. The Toyota group said in June that Toyota Industries would be taken private through a holding company into which Toyota Motor, Toyota Fudosan and Toyota chairman Akio Toyoda would invest, and that the tender offer would start after receiving regulatory approval. Stay up to date with the latest news, trends and innovations that are driving the global automotive industry with the Reuters Auto File newsletter. Sign up here. Advertisement · Scroll to continue The value of the tender offer for the shares of Toyota Industries is expected to be around 3.7 trillion yen ($24.65 billion) based on an acquisition price of 16,300 yen a share. The deal marks a landmark unwinding of cross-shareholdings that is expected to boost the influence of the founding Toyoda family. Japanese businesses have come under pressure in recent years to reduce such shareholdings amid a government push for corporate governance. The planned buyout has drawn criticism from some international investors, who have argued that the offer undervalues Toyota Industries' real estate assets. Advertisement · Scroll to continue A Toyota spokesperson said the tender offer reflected the intrinsic value of Toyota Industries, noting it represented a 23% premium to the share price before the initial reports of a potential deal. "While it may not satisfy all shareholders, we're confident in both the fairness of the price and the strategic purpose of the transaction," the spokesperson said, adding the deal would create synergies across the group and streamline governance. As part of the deal, Toyota and group firms Denso (6902.T), Toyota Tsusho (8015.T) and Aisin (7259.T) will sell their stakes in Toyota Industries and acquire their own shares now held by it, with the purchase of Toyota's holdings expected to come to one trillion yen. Founded in 1926 as Toyoda Automatic Loom Works, Toyota Industries later spun off its automotive division into what became Toyota Motor. ($1 = 150.1100 yen) Reporting by Daniel Leussink Editing by Chang-Ran Kim and Kate Mayberry Our Standards: The Thomson Reuters Trust Principles. Toyota Motor's tender offer to take Toyota Industries private has been delayed from its expected early December launch to February or later, pushing back the timeline for the landmark 3.7 trillion yen ($24.65 billion) transaction. The deal, part of a broader effort to unwind complex cross-shareholdings in line with Japan's corporate governance push, aims to consolidate the founding Toyoda family's influence and streamline group synergies. The offer is priced at 16,300 yen per share for Toyota Industries, which Toyota Motor defends as fair, noting it represents a 23% premium to the stock's price before the deal was reported. However, this valuation has drawn criticism from some international investors who contend it undervalues Toyota Industries' significant real estate assets. The restructuring also involves a one trillion yen share buyback by Toyota Motor, as it and other group firms divest their holdings in Toyota Industries and repurchase their own stock, a key component now also subject to the new, later timeline.

Key Decisions for Investors

• Investors in Toyota Industries should note the tender offer delay to February or later extends the holding period, and the persistent criticism over asset valuation introduces a risk of further challenges or a potential, albeit unlikely, revision to the 16,300 yen per share offer.
• For Toyota Motor shareholders, the deal's delay postpones the realization of strategic benefits like streamlined governance and the execution of the a one trillion yen share buyback, a key positive catalyst for the stock.
• Event-driven and arbitrage investors should closely monitor the spread between Toyota Industries' market price and the offer price, as the delay and vocal investor dissent create uncertainty and potential volatility around the deal's successful completion on its current terms.