Toyota Industries stock soars on buyout plan

But Toyoda bid risks Japan’s reform effort

- NICHOLAS TAKAHASHI ALICE FRENCH

Toyota Motor Corp Chairman Akio Toyoda’s bid to buy out Toyota Industries Corp could pit him against Japan's efforts to reform its corporate landscape by demanding more shareholder accountability from top businesses.

While the $42 billion take-private attempt is being cheered by investors — Toyota Industries’ stock climbed by the daily limit of 23%, and Toyota Motor jumped as much as 5.6% — the potential move could also mark a retreat in the Toyota Group's attempts to unwind cross-shareholdings and appoint more independent directors.

The chairman holds less than 1% of Toyota Industries, but the company has a 9.1% stake in the carmaker and much depends on how these holdings are rationalised if and when the deal proceeds.

Some analysts note that bringing Toyota Industries further under the control of the carmaker and Mr Toyoda would be counter to the government's goal of dismantling cozy business relationships to boost merger and acquisition activity, including from foreign entities.