Elliott's $35 billion privatization of Toyota(TM.US): Offer period extended, bidding intensifies

Toyota Motor Corporation (TM.US) announced an extension of the acceptance period for its key subsidiary privatization offer, indicating that the Japanese industrial giant still needs more time to gain additional shareholder support amid a strong counterattack from aggressive investment firm Elliott Investment Management. The new deadline is set for March 2, with the offer price remaining unchanged from the original, which was set to expire this Thursday.

This extension marks a further escalation in the high-profile standoff between Toyota and Elliott and also means that the activist fund still has a chance to overturn the deal, which they believe severely undervalues Toyota Industries’ worth. While the extension provides Toyota with a window to lobby more investors, it also leaves room for the stock price to rise above the offer price, potentially forcing Toyota to increase the premium to close the deal.

Since its inception, the privatization plan has been highly controversial. Toyota proposed an initial offer of 16,300 yen per share last June, which immediately drew strong reactions from investors and analysts, who accused it of trying to force shareholders out at a “floor price.” Under continued pressure from Elliott, Toyota raised the offer to 18,800 yen per share, valuing Toyota Industries at 6.1 trillion yen, but still below its current market capitalization, with limited calming effect.

Toyota Industries’ stock price reversed its downward trend, rising as much as 1.7% to 20,000 yen during trading.

According to the plan, Toyota Group’s total expenditure for this privatization will reach 5.4 trillion yen, with only the acquisition of Toyota Industries requiring an investment of 4.3 trillion yen.

As the most vigorous opponent of this deal, Elliott proposed an alternative plan suggesting that Toyota Industries could reach a valuation of over 40,000 yen per share by 2028 through measures such as解除交叉持股, business integration, optimized capital allocation, and governance reforms.

Toyota Industries is one of the world’s largest forklift manufacturers. It was originally founded by Sakichi Toyoda, the founder of Toyota Group, to commercialize his automatic loom invention. His son, Kiichiro Toyoda, later founded Toyota Motor Corporation, which is now the world’s largest automaker. Akio Toyoda, grandson of Kiichiro, led Toyota Motor for 14 years and stepped down as CEO in 2023, becoming chairman.

As Toyota’s footprint continues to expand, its internal cross-shareholding network has become increasingly complex. The Japanese government has been urging companies to dismantle such arrangements in recent years to improve corporate governance, increase transparency, and enhance shareholder returns.