(Feb 26): Toyota Motor Corp is planning to unwind about JPY3 trillion (US$19 billion or $24.2 billion) of strategic shareholdings held by banks and other financial institutions, in a major boost to Japan’s corporate reform efforts, Reuters reported.
The value of the sale may be higher, depending on the willingness of shareholders to sell, Reuters said, citing people familiar with the matter it didn’t identify. Toyota is aiming for the sale to happen as early as this year, though the timing and scale could change — or the plan could be abandoned altogether, it said.
A spokesperson for Toyota Motor declined to comment on the report. The shares briefly extended gains after the report before paring those gains. The stock traded at JPY3,775, up 1.5%, at 2.27pm in Tokyo on Thursday.
The plan would mark an acceleration of Toyota’s push to unwind cross shareholdings. That process, kick-started in 2024, was in response to government reforms aimed at getting large Japanese corporations to untangle their complex web of holdings to boost investor returns and encourage fair competition.
“Is Toyota going to keep them as treasury without cancellation or cancel them to lower the number of shares outstanding in real terms?” said Bloomberg Intelligence senior auto analyst Tatsuo Yoshida. “It is more important how Toyota utilises the shares bought back.”
Bloomberg News has previously reported that Mitsubishi UFJ Financial Group Inc and Sumitomo Mitsui Financial Group Inc planned to divest JPY1.32 trillion worth of strategic shareholdings in Toyota.
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The news is “positive from a corporate governance perspective”, said Kazuhiro Sasaki, the head of research at Phillip Securities Japan. “Having financial institutions as cross shareholders isn’t considered good governance. Toyota’s plan also coincides with the scheduled revision of Japan’s corporate governance code this year, so it’s likely to catch those tailwinds.”
But broader action across Japan’s corporate landscape has been slow and the Toyota group’s own push to privatise a key unit has put reform efforts under the spotlight.
The group’s attempt to buyout Toyota Industries Corp has drawn strong criticism from activist investor Elliott Investment Management, which is rallying investors to block the bid.
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The privatisation push is being led by Toyota Motor chairman Akio Toyoda, and the tender period closes on Monday. Earlier this month, Toyota Industries said the Toyota group was about 9% away from the two-thirds majority it needed to initiate a squeeze-out.
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