Akio Toyoda, grandson of Toyota Motors founder Kiichiro Toyoda, led a $33 billion effort to capture Toyota Industries, one of the largest and oldest suppliers of the automaker. The deal has a symbolic weight of depth: Toyota Industries is Toyota Motor's original parent company. Founded in 1926 by Kiichiro Toyoda in 1926, Toyota Industries rotated Toyota Motors from Toyota Motors into a standalone entity in 1937. Now, nearly a century later, Akio Toyoda is taking back the ancestral core of the Toyota Empire, a big discount – occupying the founder’s mastery in the world’s largest automatic group home.
Toyota Motor and Toyota Industry are both subsidiaries within the Toyota Group's corporate group. Today, Toyota Industries has become the world's largest forklift manufacturer.
Akio Toyoda, 69, is currently the chairman of Toyota Motor. He led the company as CEO and president for 14 years before resigning in 2023.
The offer was well below the $42 billion expected by investors, prompting criticism of Akio Toyoda's possible discounted price in engineering acquisitions to benefit the Toyota Group's leadership at the expense of shareholders. “The bidding price is very low compared to our estimates of intrinsic value,” David Mitchinson, chief investment officer of Zennor Asset Management and Toyota Industries Investor, said in an interview with Yahoo Finance, adding that shareholders had “strong opposition.”
Still, the offer was a premium over the Toyota industry's stock price before it was openly traded in April. Toyota executives believe the valuation is fair, reflecting this premium. They also suggest that investors may artificially raise expectations in the announcement’s proposal, which could explain why shares fell more than 10% this week after the formal proposal.
The acquisition also caused other problems. Control of Toyota Industries will now be transferred to Toyota Fudusan, an unlisted real estate company that serves as a private investment vehicle for the Toyoda family, and Akio Toyoda is also chairman. Toyoda's donation is just 1 billion yen, which is 1 billion yen of his personal wealth, with the rest funded by Toyota Fudusan, Toyota Motors and loans from Japan's largest banks.
To quell the concerns about the deal, it is the power of the founding family, senior Toyota Motors executive (in general, the company’s chief financial officer) introduced the online briefing: “The chairman’s involvement has nothing to do with control of the business, but about his commitment to the deal, to support improvements locally and in Japan.”
According to the press release, the three parties involved said the acquisition was intended to “increase cooperation within the Toyota Group.” The group operates a complex network of companies and subsidiaries. In recent years, the Japanese government has improved corporate governance by relaxing these structures (especially the so-called “parent-child list”), where both parent companies and their subsidiaries can openly trade these structures (especially the so-called “parent-child list”) in order to improve corporate governance. In this case, like Toyota Motor and Toyota industries, shareholder value can be reduced. The Toyota Group acknowledges these governance issues and says steps are being taken to address them.
