Toyota Motor (7203.T) Chairman Akio Toyoda has proposed acquiring supplier Toyota Industries (6201.T) in a possible 6 trillion yen ($42 billion) deal, Bloomberg News reported on Friday, in what would mark a pivotal buyout for Japan Inc and reshape its most powerful corporate group.
Toyota Industries, which makes parts for the automaker, has formed a special committee after receiving the proposal and has hired advisers to examine the offer, Bloomberg said, citing people familiar with the matter.
If executed, the deal would give Toyoda, the grandson of the automaker's founder, full control of a major firm in the sprawling Toyota group. Toyota Industries, which began as a maker of textile looms, is the company from which the world's top-selling automaker eventually developed, giving it particular symbolic importance within the group.
Toyota Industries continues to make textile machinery today, as well as car engines and electronics, and stamping dies.
No one was immediately available for comment at Toyota Motor or Toyota Industries outside regular working hours.
The deal, if it proceeds, will be financed by Toyoda's own personal investment along with loans from Japan's "megabanks", Bloomberg said.
The 6 trillion offer represents around a 40% premium to the price of Toyota Industries as of Friday's close, according to LSEG data.
Japan has seen a surge in both management buyouts and corporate acquisitions in recent years. Many of the deals have been driven by expectations that a corporate governance overhaul will bring better shareholder returns as well as belief that the economy has finally turned the corner after years of painful deflation.
However, not all deals have been successful. The founding family of retailer Seven & i Holdings (3382.T), dropped a $58 billion management buyout offer for the company in February after it failed to secure financing for the deal. Seven & i owns the 7-Eleven chain of convenience stores. The failure of that deal marked a fresh impetus for Canadian rival Alimentation Couche-Tard (ATD.TO), which is bidding for Seven & i.
($1 = 143.5300 yen)
