Toyota industries shares slide on buyout discount blowback

Toyota Industries shares fell the most in nine months after the Toyota group unveiled a ¥4.7 trillion ($33 billion) plan to privatise its premier unit, drawing sharp criticism from investors and analysts who say the proposal significantly undervalues the company.

- NICHOLAS TAKAHASHI

The planned tender offer of ¥16,300 per share from a group led by Toyota Motor Corp's Chairman Akio Toyoda represents an 11% discount to Tuesday's closing price for the maker of textile looms, forklifts and car components.

Toyota Industries stock fell as much as 13% as of early afternoon trading in Tokyo yesterday, the biggest intraday drop since August 2024.

"Honestly, I'm not quite sure what they're trying to do here," said Yasuo Sakuma, president of Libra Investments. "It's standard practice for tender offer prices to include a premium."

The deal, first reported by Bloomberg in April, may inflame concerns over governance rather than placate them. Potentially one of the biggest-ever buyouts on record, the privatisation of Toyota Industries could resolve a parent-child structure that has been criticised. At the same time, a takeover may give Mr Toyoda greater influence over the carmaker founded by his grandfather and its group companies at a price that risks alienating shareholders.

A new holding company would be established to privatise Toyota Industries, according to a statement issued on Tuesday. That entity would mostly be owned by Toyota Fudosan Co, an unlisted real estate firm which has Mr Toyoda as chairman. He will personally invest ¥1 billion into the holding company as well.