The founding family of Toyota Motor Corp, including Chairman Akio Toyoda, has proposed acquiring the remaining shares of Toyota Industries Corp through a tender offer. Sources familiar with the matter said major lenders are expected to finance the deal.

Toyota Industries Committee Reviews Proposal Amid Market Buzz

Toyota Industries, originally a weaving machine manufacturer, is now a major auto parts and lift truck producer. The company has formed a committee to evaluate the proposal. Toyota Industries confirmed it had received proposals about going private via a special purpose vehicle, but denied receiving an offer directly from Toyoda or Toyota group.

Deep Cross-Shareholdings Add Complexity to Valuation

Toyota Industries owns about 9% of Toyota Motor, while Toyota Motor holds around 24% of Toyota Industries. As of April 28, Toyota Industries’ market capitalization stood at ¥4.3 trillion. Its stake in Toyota Motor was worth over ¥3.2 trillion, accounting for nearly 80% of its market value.

Business Breakdown Highlights Heavy Reliance on Forklift Division

Around 75% of Toyota Industries’ operating income comes from its Materials Handling Equipment division, which includes the world’s largest forklift business. Its car parts unit contributes about one-fifth of operating income, with margins below 4%. The company builds some Toyota Motor models, including the RAV4 SUV, and supplies components like air conditioning compressors.

Market Reacts as Analysts Value Company Above Reported Offer

Analysts estimate Toyota Industries’ operating income this year could reach ¥280 billion. Applying a valuation multiple in line with German rival Kion suggests a standalone value of ¥3.4 trillion. Combined with its stake in Toyota Motor, the implied total value reaches ¥6.6 trillion, 10% higher than the reported offer. If the ¥6 trillion figure includes enterprise value, net of debt, the offer could represent just ¥4.8 trillion.

Investor Response Follows Bloomberg and Financial Times Reports

Shares of Toyota Industries rose 23% on April 28 following Bloomberg’s report on the buyout proposal. Toyota Motor shares also gained 3.6% after disclosing it was exploring an investment in a potential acquisition of Toyota Industries.

PHOTO: REUTERS

This article was created with AI assistance.