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(Bloomberg) -- Toyota Motor Corp. Chairman Akio Toyoda has proposed a buyout of Toyota Industries Corp., people familiar with the matter said, seeking to consolidate his grip on Japan’s biggest business empire as a wave of merger and acquisition activity roils the country.
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The proposal values Toyota Industries, which makes looms for textile manufacturing as well as parts for Toyota’s cars, at ¥6 trillion ($42 billion), one of the people said, a roughly 40% premium over its market capitalization at the close Friday.
Toyota Industries, the company founded by Toyoda’s great-grandfather Sakichi that ultimately birthed the world’s No. 1 carmaker, formed a special committee after receiving the proposal and hired advisers to review its viability, the people said, asking not to be identified because the information isn’t public.
Although Akio is chairman of Toyota Motor, his direct ownership of the company stands at less than 1%, while Toyota Industries has a 9.1% stake in the carmaker. The buyout would bolster Akio’s holding and influence over the broader Toyota group, which includes suppliers and stakes in other businesses, including rival carmakers.
A deal would rank among the biggest buyouts on record globally. Discussions are still ongoing and the deal may not proceed in its current form, or at all.
In a statement, Toyota Motor said it was considering various possibilities, including a partial investment in Toyota Industries, but nothing has been decided. Toyota Industries said in an emailed statement that it’s considering all possibilities, including capital policies, to enhance the corporate value of the group, but no decisions have been made.
Seven & i Precedent
The Toyota Industries buyout proposal comes months after the collapse of a similar bid to take Japanese retailer Seven & i Holdings Co. private.
Led by its founding Ito family, that plan’s failure due to lack of funding has raised the chances of a takeover by Canadian rival Alimentation Couche-Tard Inc. The liberalization of capital flows in the country, along with a push for greater governance and accountability to shareholders, has challenged longstanding ties between management and stakeholders that emphasized stability.