TLDR
- Toyota increased its buyout offer for Toyota Industries to ¥20,600 ($132) from an earlier ¥18,800 per share
- The revised buyout values Toyota Industries at approximately $40 billion
- Elliott Investment Management, with a 7.1% ownership position, has agreed to accept the updated terms
- Shareholders now have until March 16 to respond to the tender offer after an extension
- Shares of Toyota Motor (TM) rose on Monday as the agreement was announced
Shares of Toyota Motor’s U.S.-traded stock climbed in early trading Monday after the automaker successfully resolved a prolonged dispute with Elliott Investment Management, the activist hedge fund.
The Japanese automaker increased its buyout proposal for Toyota Industries — the forklift manufacturer trading as TICO — to ¥20,600 ($132) for each share. This represents a significant boost from the ¥18,800 per share proposal announced in January.
At the new price point, the transaction is valued at approximately $40 billion.
Elliott, currently holding a 7.1% ownership stake in Toyota Industries, has committed to tendering its shares at the revised valuation. The investment firm had been advocating for a higher price since disclosing an approximately 3% position last November.
The tender offer window has been pushed back by two weeks, now closing on March 16.
A Long Road to a Deal
Toyota’s initial proposal, presented last June, stood at ¥16,300 ($104) per share. Elliott characterized this as an inadequate offer and argued Toyota Industries was being undervalued by up to 38%.
When the automaker boosted the bid to ¥18,800 in January, Elliott once again declined, stating it “very substantially undervalues” the subsidiary. The activist fund had suggested a reasonable valuation closer to ¥25,000 ($160) per share.
While the current ¥20,600 price point remains considerably below Elliott’s target, the firm described it as “an improved outcome” for minority investors and decided to accept the terms.
Elliott initially accumulated its 5% position at approximately ¥16,650 per share. With the ¥20,600 buyout price, the investment firm stands to realize an estimated 24% gain on its holdings.
Though short of Elliott’s desired valuation, it represents a meaningful profit — and allows the firm to exit without protracted litigation.
The Offer Conditions
The enhanced offer includes specific requirements. Toyota indicated the higher price is contingent upon obtaining loan guarantees from its banking partners.
The acquisition is being pursued by a consortium featuring Toyota Motor, Toyota Chairman Akio Toyoda, and the conglomerate’s property division, Toyota Fudosan.
The disclosure was published Monday, with the tender offer initially scheduled to expire that day before the extension was granted.
Toyota Industries’ shares surged on the announcement. Toyota Motor’s U.S.-listed TM stock also posted gains in early Monday sessions.
Elliott’s decision to accept eliminates the threat of the activist pursuing legal challenges to the valuation — a possibility that had cast uncertainty over the transaction.
With the tender offer deadline now set for March 16, shareholders have additional time to evaluate whether to accept the ¥20,600 per share offer.
