Toyota delays tender offer into March amid Elliott pushback

Toyota Group announced on 12 February that it would extend the deadline for its tender offer to take Toyota Industries private until 2 March, indicating that activist investor Elliott Investment Management’s campaign to block the plan is enjoying some degree of success. The deadline was initially set for the 12th, but now Toyota is saying it wants to give shareholders a little more time to consider the offer—and hopefully boost the likelihood of its success. 

Toyota first launched the tender offer on 15 January and later raised its price to JP¥18,800 per share from just JP¥16,300 (US$104), and has said there is no chance of it raising the purchase price any further. The automaker claims that it can strengthen Toyota Industries’ car parts and forklift manufacturing business by delisting, although it needs to raise combined companies’ ownership from 42% to 66.7% to achieve privatisation. 

Chairman Akio Toyoda has opined that Toyota Industries—itself the founding company of the entire Toyota Group—must play a central role in the group’s technological transformation and should therefore be freed from short-term shareholder pressures.

Investors holding roughly 33% of total shares have agreed to sell, which when combined with Toyota Motor’s existing 25% stake leaves the group just under 10% short of the two-thirds majority required. Elliott disclosed ownership of 3.26% in November and has since raised its stake to 7.14%, and has for weeks been urging shareholders to reject the offer on the basis that it is significantly undervalued. 

The New York hedge fund argues the transaction lacks transparency and falls short of proper governance practices. It has also warned that allowing the revised tender to succeed would represent a substantial setback for Japan’s corporate governance reforms.

Elliott maintains that Toyota Industries has an intrinsic net asset value of JP¥26,134 per share, and has speculated the stock price could exceed JP¥40,000 by March 2028 if the company improves its global operations, strengthens its product lineup for emerging markets and shifts its focus from automotive to logistics. Toyota Industries acknowledges many of Elliott’s concerns but disputes the hedge fund’s argument that profitability can be improved as quickly as suggested. 

The outcome is being closely watched by investors for clues to the fate of corporate governance reforms in Japan, which have been a key factor driving the Japanese stock market that has doubled in value over the last three years. Elliott has amassed more than US$5.5bn in Japanese holdings across four companies, with Toyota Industries now its third-largest holding globally valued at nearly US$3bn.

Toyota Industries shares reached an intraday high of JP¥20,010 on 12 February, 6.4% higher than Toyota Group’s maximum offer.