Toyota Industries Corp. (6201, Financial) shares surged by 23% following reports of a potential acquisition proposal by Toyota Motor Corp.'s Chairman, Akio Toyoda. Investors are assessing the implications for corporate governance within Japan's largest business group. The proposal, reportedly valuing Toyota Industries at 6 trillion yen ($42 billion), represents a 40% premium over its recent market value. Toyota Industries, known for producing textile machinery and automotive components, saw trading halted due to overwhelming buy orders. Toyota Motor's shares also rose, peaking at a 5.2% increase.
The potential acquisition could become one of the world's largest deals, amidst growing pressure on Japanese companies to enhance governance and returns. Analysts express concerns over possible shareholder opposition, as the move might counter recent efforts to improve governance. The acquisition is seen to potentially diminish the chances of both companies enhancing equity returns. However, some analysts suggest it could provide Toyota's founding family with greater management freedom, benefiting shareholders in the long term.
Despite some investor concerns, the market responded positively, anticipating premiums from the potential deal. Toyota Industries' core industrial vehicle business remains profitable, and the acquisition could further strengthen Toyota's group influence.
