Toyota plans $24 billion unwinding of strategic shareholdings in watershed move
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Regulators have been encouraging Japanese companies to unwind their cross-shareholdings. a practice seen as insulating management from shareholders.
PHOTO: AFP
TOKYO – Toyota is planning a large-scale unwinding of strategic shareholdings that would involve banks and insurance firms selling its shares, two sources said, in what would mark a watershed moment in Japan’s corporate governance reform.
The sale will likely total around three trillion yen (S$24.3 billion) but could be larger depending on shareholders’ willingness to sell, the sources said. Toyota aims for the sale to happen as early as 2026, although the timing and scale could change depending on shareholders, or the plan could be abandoned, one of the sources said.
Toyota aims to acquire shares through buybacks, the sources added. A secondary sale to other investors has also emerged as an option, one of the sources said.
The move by the world’s largest automaker would be evidence of the scale of Japan’s ongoing corporate governance reform. Regulators and the Tokyo Stock Exchange have been encouraging Japanese companies to unwind their cross-shareholdings.
The practice, which involves firms holding shares in each other to cement business ties, has long been criticised by governance experts and overseas investors as insulating management from shareholders. Although widespread in Japan for decades, it has been less common in the West.
While Toyota has a policy to cut its cross-shareholdings, it has also come under fire over governance and has faced calls from investors to improve capital efficiency.
Toyota wants to demonstrate its seriousness about governance reform by unwinding the strategic shares, one of the sources said.
The automaker is in the midst of a tender offer for forklift maker Toyota Industries. Activist investor Elliott opposes the deal, arguing it is underpriced and lacks transparency. Toyota has extended the tender offer to March 2 due to insufficient shareholder support.
Toyota shareholders include banks such as Sumitomo Mitsui Financial Group and Mitsubishi UFJ Financial Group and insurers such as MS&AD Insurance Group.
Japanese banks and insurers have in recent years outlined policies to cut their cross-shareholdings. REUTERS
