Toyota’s buyout of group firm faces new obstacle after Elliott takes stake

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By Daniel Leussink

TOKYO (Reuters) -Toyota Motor’s planned buyout of group firm Toyota Industries is set to face more hurdles after activist investor Elliott Investment Management said it had bought a significant stake in the forklift manufacturer.

Elliott said in a statement that the proposed deal undervalued the company, lacked transparency and fell short of proper governance practices. Other global investors have also asked for more disclosure of the deal that would strengthen the influence of the founding Toyoda family within the group.

The transaction is being closely watched as it coincides with a push by regulators and the government for better corporate governance.

Toyota Industries, which is also a key supplier to the Japanese automaker, is to be taken private by Toyota Motor, group real estate company Toyota Fudosan and Toyota Chairman Akio Toyoda, the companies announced in June.

Elliott said it has been sharing its views with Toyota Industries’ management and board. It described itself as one of Toyota Industries’ largest shareholders but did not disclose the size of its stake.

Toyota Industries said in a filing earlier on Tuesday that Elliott owned 3.26% as of September 30. Bloomberg reported that Elliott’s stake was currently close to 5%.

TOYOTA INDUSTRIES IN ‘CONTINUOUS AND CONSTRUCTIVE’ DIALOGUE

Toyota Motor, which owned about 25% of Toyota Industries as of end-September, did not immediately respond to a request for comment on Elliott’s views. 

Toyota Fudosan, which owned 5.42% of Toyota Industries as of end-September, said it would not comment on talks with other companies or its shareholders.

Toyota Industries said it has been engaging in continuous and constructive dialogue with its shareholders in a sincere and respectful manner, and would continue to do so.

Toyota Motor and its fellow bidders have offered 16,300 yen per Toyota Industries share, a premium of around 23% compared to its stock price before word of the deal broke in April.

On Tuesday, before Elliott released its statement, Toyota Industries’ shares closed at 17,250 yen, suggesting investors believe that Toyota Motor and its fellow bidders will have to offer more.

This year, Elliott is also applying pressure to Japan’s Kansai Electric Power, saying the utility could become a more attractive long-term investment by selling non-core assets and boosting profitability and shareholder returns.

It has a stake of between 4% and 5%, a source has said.

It has also been active in South Korea in the past, targeting Samsung Electronics and Hyundai Motor in high-profile battles.

(Reporting by Daniel Leussink and David Dolan in Tokyo and Dheeraj Kumar in Bengaluru; Editing by Edwina Gibbs)