Shares of Toyota Industries fell 12% in Tokyo trade Wednesday, following Toyota Motor’s announcement of a $33 billion plan to take the company private.
The offer price is 16,300 yen per share, a 23% premium over the price before the deal leaked in April but below the 18,400 yen price before the official announcement. Shares closed at 16,205 yen.
Toyota Motor said the deal considers minority shareholders’ interests and includes a share buyback through a tender offer. The transaction is part of a capital realignment within the Toyota Group as it shifts toward becoming a mobility company.
The complex 4.7 trillion yen deal will set up a new holding company. Toyota Group’s real estate unit Toyota Fudosan will invest 180 billion yen, Toyota Motor chairman Akio Toyoda will invest 1 billion yen, and Toyota Motor will invest 700 billion yen in non-voting preferred shares.
Toyota Motor and group companies Aisin, Denso, and Toyota Tsusho will sell their shares in Toyota Industries and buy back shares Toyota Industries currently holds.
As of September last year, Toyota Motor owned about 24% of Toyota Industries. Toyota Industries held around 9% of Toyota Motor and more than 5% of Denso.
The deal addresses parent-subsidiary governance issues and will unwind cross-shareholdings between Toyota Group companies, a move encouraged by Japanese regulators and the Tokyo Stock Exchange.
Toyota Industries was founded in 1926 as Toyoda Automatic Loom Works. Its automotive division was later spun off as Toyota Motor.
Some shareholders have raised concerns over the offer price and minority shareholder treatment. The tender offer was initially reported to be about $42 billion, higher than the final announced value.
