Toyota Motor announced that it is considering whether to invest in a prospective$ 42 billion purchase of Toyota Industries, a key component provider.
Following reports about the potential buyout, the manufacturer said in a filing with the Tokyo stock exchange on Saturday that” we are now exploring different options, including limited expense.”
In a potential 6 trillion yen ( US$ 42 billion ) offer, Toyota Chairman Akio Toyoda and his founding family made a report to Bloomberg News on Friday.
Toyota Industries, which has a market value of 4 trillion yen, stated in a statement that it had received ideas to go private through a particular goal company but denied that it had received a buyout request from the president or the Toyota party.
Toyota Industries is considering tapping its class organizations as well as major lenders to finance a merger, according to two sources with knowledge of the situation. Additionally, they claimed that the suggestion did not originate from Toyota or Akio Toyoda.
The resources, who declined to be identified because the situation is not common, claimed that if Toyota Industries went secret, it may help improve the company’s corporate management as cross-shareholdings would be eliminated.
Nothing has been decided, Toyota and Toyota Industries both claimed in their remarks.
As of September of last year, Toyota held a 24 % stake in Toyota Industries, while Denso, another important supplier, held a 5. 41 % stake.
To increase investor pressure and make purchases, Toyota Industries has been subject to increasing shareholder pressure.
Some of its cross-shareholdings, including share in Aisin, a separate supplier to the core Toyota group, have been sold.
Going secret, according to one of the solutions, may also provide Toyota Industries the freedom to concentrate on growth techniques without worrying about investor returns.
Cross-shareholdings, which are very common in Japan and are a form of corporate governance, have drawn more and more scrutiny from regulators and shareholders because they prevent management from having to defend the interests of the common shareholders.
Sakichi Toyoda established Toyota Industries in 1926 to produce automatic mills, previously Toyoda Automatic Loom Works. The business created a section for automobiles, which was later merged with Toyota Motor. Toyota Motor’s RAV4 sport utility vehicle and engine are produced by Toyota Industries, a major producer of trucks.