Shares of Toyota Industries surged to a record high on Thursday after Toyota Motor raised its buyout offer for the group company, valuing the deal at more than $35 billion.
Toyota Industries stock climbed nearly 6% to around 19,080 yen, moving above the revised tender offer price and signalling investor expectations that the bid could be further increased. Shares of Toyota Motor also advanced more than 2% in Tokyo trading.
Toyota Motor said late Wednesday that it had raised the proposed buyout price to 18,800 yen per share, a 15% increase from the 16,300 yen per share offer announced in June last year, as it seeks to take Toyota Industries private.
The revised bid follows concerns raised by Toyota Industries in December, when it said the earlier offer undervalued the company and could limit the likelihood of the deal’s success.
Investor Pressure and Valuation Debate
Despite the higher offer, analysts said the new price may still fall short of expectations. Arun George, a global equity research analyst at SmartKarma, said the bid remains below the midpoint of the valuation range outlined by an independent adviser.
Market participants have also pointed to the possibility of shareholder activism. Independent analyst Travis Lundy said the transaction could face pushback, with investors potentially demanding a higher price or seeking to block the deal altogether.
Toyota Industries, which originally founded Toyota Motor, manufactures forklifts, engines, electronic components and industrial equipment, making it a strategically important part of Japan’s largest corporate group.
Broader Context for Toyota Motor
The buyout comes at a time when Toyota Motor is navigating headwinds in its core automotive business. The company recently reported a 5.5% year-on-year drop in global production in November, the first decline in six months, while global sales fell 2.2%.
Toyota has also warned of a significant impact from US tariffs, estimating a 1.45 trillion yen ($9 billion) hit for the financial year ending March. Despite these challenges, the automaker continues to expand its overseas manufacturing footprint, announcing plans last year to invest nearly $1 billion across US facilities as part of a longer-term $10 billion commitment by 2030.
