Toyota Motor Corp. could be about to invest in a buyout of the company it was born out of in the 1930s and now is a key supplier of automotive parts.
Bloomberg reports the potential $42 billion buyout of Toyota Industries has been proposed by Toyota Motor Chairman Akio Toyoda, whose grandfather, Kiichiro Toyoda, spun off the automaker wing from a successful automatic loom business in 1933.
“We are currently exploring various possibilities, including partial investment,” the automaker says in a filing with the Tokyo stock exchange following media reports about the possible buyout.
In a company statement, Toyota Industries says it has received proposals about going private through a special purpose company but denied it had received a buyout proposal from the Toyota chairman or the Toyota auto group.
Some industry watchers see this as a move by the automaker to secure better control over its vehicle parts supply chain especially in the face of global trading uncertainties sparked by the U.S. tariffs on automobiles and auto parts imposed by President Donald Trump.
However, sources quoted by Reuters say if Toyota Industries were to go private, it would help improve the Toyota group's corporate governance because cross-shareholdings, where companies hold shares in each other common in Japan, would be unwound.
Toyota owns about 24% of Toyota Industries, while Toyota Industries holds 9.07% of Toyota Motor and 5.41% of Denso, another key Toyota supplier.
One of the sources says going private would also give Toyota Industries the freedom to focus on growth strategies without worrying about shareholder returns.
