Toyota Raises Toyota Industries Buyout Offer Amid Governance Concerns

Toyota Motor has increased its buyout offer for group company Toyota Industries (TICO) to 20,600 yen ($131) per share, valuing the forklift maker at approximately $30 billion. The revised bid marks a partial win for activist investor Elliott Investment Management, which had pushed for a higher valuation after rejecting earlier offers of 16,300 yen and 18,800 yen per share. Elliott, led by Paul Singer, had previously argued that Toyota Industries shares were worth more than 26,000 yen each and has now agreed to tender its stake.

While the higher offer represents a better financial outcome for minority shareholders, corporate governance concerns remain. Critics argue that the transaction still undervalues Toyota Industries and lacks full transparency, particularly regarding expected synergies and shareholder classification. The deal excludes Toyota Motor’s 24.66% stake, requiring 42.01% approval from minority shareholders to proceed before the March 16 deadline.

A key point of contention involves the classification of Toyota group companies Denso, Aisin, and Toyota Tsusho, which collectively hold 12.21% of TICO. These firms have been labeled as independent minority shareholders, a move some investors claim lowers the approval threshold and weakens minority shareholder protections. Advocacy groups, including the Asian Corporate Governance Association, have questioned this approach and called for clearer disclosure standards.

Chairman Akio Toyoda, grandson of the company’s founder, is set to increase his personal stake in Toyota Industries from 0.05% to 0.5%, investing roughly $6.5 million. Although Toyota denies the deal unfairly benefits insiders, some institutional investors still consider the offer price inadequate given TICO’s asset quality.

The buyout aims to give Toyota Industries greater flexibility to invest in advanced mobility technology without short-term profit pressures. Despite recent improvements in Japanese corporate governance practices, analysts say the case highlights ongoing challenges in protecting minority shareholder rights in Japan’s corporate landscape.