Toyota Increases Offer for Subsidiary by 15% Following Elliott’s Push

Toyota Boosts Buyout Offer After Pressure from Elliott

Toyota has increased its bid to acquire the remaining shares of Toyota Industries Corp., responding to calls from Elliott Investment Management to improve what was previously considered an undervalued offer.

The revised proposal raises the price to ¥18,800 per share for the outstanding shares of Toyota Industries, up from the initial ¥16,300 offered in June of last year, according to Toyota Motor Corp. The tender offer is set to commence on Thursday and will be open until February 12.

Key Headlines from Bloomberg

This improved offer marks a significant win for activist investors in Japan and may encourage similar efforts in the future. While shareholder activism has gained momentum in the country, no campaign has previously targeted a company as large as Toyota.

The initial bid faced strong opposition from investors, including Elliott, led by billionaire Paul Singer. If the new offer satisfies critics, it could help Akio Toyoda, chairman of Toyota Motor and head of the founding family, further consolidate his influence over the group.

Since the original proposal was announced in June, Toyoda and his allies have faced mounting calls to raise the offer.

The plan involves taking Toyota Industries private through a special-purpose entity primarily controlled by Toyota Fudosan Co., a private real estate company chaired by Toyoda.

Some shareholders criticized the deal as unfair, arguing it disregarded minority investors and contradicted Japan’s push for greater corporate transparency and independence.

The buyout was initially slated to launch in December but was postponed due to delays in regulatory approval from antitrust authorities in several countries.

In November, Elliott disclosed that it had acquired a 5% stake in Toyota Industries. Shortly after, Bloomberg reported that the US-based fund was rallying support among Japanese investors and asset managers for its campaign.

Elliott’s main contention is that the offer significantly undervalues Toyota Industries, which holds substantial investments in other companies, according to Bloomberg data.

Investor Response and Background

Elliott was not the only party to object to the terms of the deal.

Since late August, Toyota Industries’ share price has consistently traded above the offer price, at times exceeding it by more than ¥1,500 per share. This trend suggests investors expected a higher bid and reduces the incentive for minority shareholders to accept the offer, as they could secure better returns in the open market.

In August, over twenty investors, including several based in Japan, sent a letter to the boards of Toyota Industries and Toyota Motor, criticizing the deal for lacking transparency and disadvantaging minority shareholders.

Toyota Industries, founded by Sakichi Toyoda, is the original company that eventually led to the creation of Toyota Motor by his son Kiichiro. Today, Toyota Motor stands as the centerpiece of Japan’s largest corporate group and is the world’s leading automaker.

Akio Toyoda served as Toyota’s CEO for 14 years before becoming chairman in 2023.

In October, Koji Sato, the current CEO of Toyota Motor, stated that Toyota Fudosan did not intend to increase its offer at that time.

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