Key Takeaways
- Toyota increased its buyout proposal for Toyota Industries to ¥20,600 ($132) per share from ¥18,800
- The revised transaction values Toyota Industries at approximately $40 billion
- Elliott Investment Management, which controls 7.1% of the company, has accepted the improved terms
- Shareholders now have until March 16 to respond to the tender offer
- Toyota Motor (TM) shares traded higher Monday after the announcement
Toyota Motor’s American depositary receipts climbed in Monday’s early session after the automaker resolved a lengthy dispute with activist hedge fund Elliott Investment Management over the valuation of subsidiary Toyota Industries.
The Japanese automotive giant increased its acquisition price for Toyota Industries — a forklift manufacturer trading as TICO — to ¥20,600 ($132) per share, representing an improvement from the January proposal of ¥18,800 per share.
At the new price point, the transaction carries an estimated value of $40 billion.
Elliott, currently holding 7.1% of Toyota Industries’ outstanding shares, has committed to selling its position at the updated price. The New York-based investment firm had pressured Toyota for a higher valuation since disclosing an initial 3% ownership stake last November.
The tender period has been pushed back two weeks, with the new expiration date set for March 16.
Evolution of the Buyout Negotiations
Toyota’s initial proposal, unveiled in June of last year, came in at ¥16,300 ($104) per share. Elliott immediately criticized the bid as inadequate, arguing Toyota Industries was being undervalued by up to 38%.
When Toyota improved its January offer to ¥18,800, Elliott once again pushed back, characterizing the price as significantly below fair market value. The activist investor had suggested a proper valuation closer to ¥25,000 ($160) per share.
While the latest ¥20,600 price remains below Elliott’s target, the firm acknowledged it represents “an improved outcome” for minority investors and has opted to accept the terms.
Elliott initially accumulated its 5% stake at an average price near ¥16,650 per share. The ¥20,600 offer translates to approximately 24% gains on that investment.
Though falling short of Elliott’s maximum valuation target, the return is substantial — and allows the firm to exit without protracted litigation.
Deal Structure and Terms
The enhanced offer includes certain requirements. Toyota has indicated the higher price point depends on obtaining loan guarantees from its banking partners.
The acquisition is structured as a consortium involving Toyota Motor, Toyota Chairman Akio Toyoda, and affiliated real estate entity Toyota Fudosan.
The regulatory filing was published Monday, the same day the tender was originally scheduled to expire before the extension was granted.
Toyota Industries shares surged on the announcement. Toyota Motor’s U.S.-traded TM stock similarly gained ground during Monday’s opening hours.
Elliott’s decision to accept the offer eliminates the possibility of legal challenges over the buyout price — a prospect that had created uncertainty around the transaction.
With the tender deadline now set for March 16, shareholders have additional time to evaluate the ¥20,600 per share proposal.
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