Some investors in Toyota Industries expressed strong dissatisfaction on Tuesday with a $33 billion takeover bid. Critics say the Japanese parent company’s offer is unfair to minority shareholders.
The privatization proposal, valued at 4.7 trillion yen ($33 billion), has drawn criticism from international investors such as London-based Zennor Asset Management and Hong Kong-based Oasis Management. Domestic shareholders also voiced concerns at the company’s annual general meeting held on the same day, ahead of the likely privatization.
Complex Deal Sparks Concerns Over Share Price and Control
Toyota Motor Corp., the world’s largest automaker by sales, plans to take Toyota Industries private through a complex multi-step process. This includes a takeover offer of 16,300 yen per share.
Several shareholders argue that the offer undervalues Toyota Industries’ true worth. They also worry it will strengthen the Toyoda family’s control over the group.
At the meeting, one shareholder said, “I guess I’m not the only one who thinks the price is too low.” Another added that the deal would lead to Toyota Motor Corp. “dominating” Toyota Industries, a key supplier.
Lengthy Meeting Highlights Shareholder Concerns
Toyota said the shareholder meeting lasted nearly two hours, its longest ever. Executives faced about two dozen questions, the highest number recorded.
Toyota Chairman Akio Toyoda is expected to face similar scrutiny at the company’s annual shareholder meeting on Thursday.
Toyota Defends Acquisition as Strategic Move
Toyota stated the acquisition would help Toyota Industries work more closely with group companies. It argued this would be possible without the pressure of short-term profit targets, as Toyota transforms into a broader “mobility company.”
The deal includes creating a new holding company. Unlisted real estate firm Toyota Fudosan will invest 180 billion yen. Akio Toyoda, grandson of Toyota’s founder, will invest 1 billion yen. Toyota Motor Corp. will contribute 700 billion yen in non-voting preferred shares.
Toyota Industries President Koichi Ito told shareholders: “This is not a decision that ignores minority shareholders, but one that takes all factors into consideration.”
Investors Seek Higher Offer Price
Oasis Management, which holds stakes in both Toyota Motor and Toyota Industries, announced on Friday that it would seek a higher bid price.
Zennor Asset Management and other investors argue the offer fails to account for Toyota Industries’ significant real estate assets. The company’s balance sheet showed 1.5 trillion yen worth of property, plant, and equipment as of the end of March. This figure reflects original costs minus depreciation and not current market value.
Deal Expected to Proceed Despite Opposition
According to data from the London Stock Exchange, Toyota Group companies own at least 39% of Toyota Industries. The takeover is widely expected to be approved.
Toyota Industries shares closed at 16,300 yen on Tuesday.
Background: From Looms to Automobiles
Toyota Industries began in 1926 as Toyota Automatic Loom Works, manufacturing automatic looms. It later established an automotive division, which eventually became the independent Toyota Motor Corporation.
