Toyota buyout is a major test for Japan's reforms

JAPAN INC HAS made great strides in corporate governance over the past decade that buoyed the stock market and ignited interest in dealmaking. It is now facing a landmark test of those efforts ina case involving the Toyota group. Minority investors are upset about the group’s bid to take one ofits listed affiliates private.They re concerned about many issues, mainly pricing and a lack of disclosure.

- JULIANA LIU

The outcome of the ¥4.7 trillion ($31 billion) deal is being closely watched, especially in South Korea, which is starting to improve its own governance. A letter signed by two dozen investors addressed “widespread concern” about the plan to buy out Toyota Industries Corp (TICO),the original company from which Toyota Motor Corp eventually emerged.The world’s biggest carmaker indicated last week there were no plans to raise the offer, which has been widely criticised for being too low, according to Bloomberg News.

The buyout is a logical move given the recent boom in mergers and acquisitions. It would also strengthen the founding family’s control over Japan’s largest business group. Toyota Motor Chairman Akio Toyoda’s direct stake in the firm amounts to less than 1%, shows data compiled by Bloomberg.TICO,a maker of looms and auto parts founded by Toyoda’s grandfather Sakichiin 1926,hasa more significant stake at 8%.