Toyota Industries’ (TYIDF) Privatization Plan Met with Scrutiny Over Valuation

On June 4, Bloomberg reported that the Toyota Group has announced a ¥4.7 trillion ($33 billion) plan to take Toyota Industries Corporation (OTC:TYIDF) private. But the plan has drawn intense criticism from analysts and investors due to the proposed tender offer being below market value. The offer price of ¥16,300 per share represents an 11% discount to Toyota Industries’ last-traded price before the announcement, which triggered a 13% drop in the stock, its steepest fall in nine months.

Toyota Motor Corp.’s Chairman Akio Toyoda leads the proposal through a new holding company primarily backed by Toyota Fudosan, an unlisted group real estate firm. Toyota Motor, major banks, and Toyoda himself will also contribute to the financing. Notably, Toyoda is set to invest ¥1 billion personally.

A technician inside a production line operating sophisticated machinery and components produced by the company.

While the structure is meant to simplify the group’s ownership and address long-standing concerns about corporate governance and cross-shareholdings, many view the deal as more beneficial to the Toyota group than to Toyota Industries’ shareholders. David Mitchinson, chief investment officer at Zennor Asset Management LLP, which owns Toyota Industries stock, stated:

“The optics of the broader Toyota group funding a deal by the Toyota chairman via his primary vehicle to take control of Toyota stock aren’t very good. This is a deal for the Toyota group, not for Toyota Industries shareholders.”

Analysts, such as Masatoshi Kikuchi, chief equity strategist at Mizuho Securities Co., have noted that takeover offers typically include a premium, not a discount. Some also argue that privatizing the company could reduce transparency and independent oversight, especially given recent governance issues within the Toyota group. Still, others see strategic value in reducing foreign investor influence and streamlining capital ties across the group.

The tender offer is expected to launch in December, with shareholder meetings for both Toyota Motor and Toyota Industries scheduled in mid-June. While the deal may simplify Toyota’s group structure, questions remain about fairness and shareholder value.

Toyota Industries Corporation manufactures and sells textile machinery, materials handling equipment, automobiles, and automobile parts in Japan, the United States, and internationally.

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