TLDR
- Toyota increased its buyout proposal for Toyota Industries to ¥20,600 ($132) per share from ¥18,800
- The revised transaction places Toyota Industries’ valuation near $40 billion
- Elliott Investment Management, which controls 7.1% of shares, has accepted the updated terms
- Shareholders now have until March 16 to participate in the tender offer
- TM stock registered gains on Monday as the agreement was announced
Shares of Toyota Motor trading in the United States saw upward movement early Monday as the company settled a protracted dispute with Elliott Investment Management, one of Wall Street’s most prominent activist investors.
The Japanese automaker has increased its acquisition proposal for Toyota Industries — a forklift manufacturing subsidiary trading as TICO — to ¥20,600 ($132) for each share. This represents a significant bump from the ¥18,800 per share proposal introduced in January.
Under the new terms, the transaction carries an approximate value of $40 billion.
Elliott, which has accumulated a 7.1% ownership position in Toyota Industries, has committed to accepting the enhanced offer. The investment firm had been advocating for improved pricing ever since disclosing an initial 3% stake last November.
The acceptance window for shareholders has been pushed back by two weeks, now closing on March 16.
A Long Road to a Deal
Toyota’s initial proposal, unveiled last June, stood at ¥16,300 ($104) per share. Elliott characterized it as significantly below fair value, arguing it underestimated Toyota Industries by approximately 38%.
Following Toyota’s January revision to ¥18,800, Elliott maintained its opposition, contending the offer “very substantially undervalues” the subsidiary. The activist fund had suggested a reasonable valuation closer to ¥25,000 ($160) per share.
While the latest ¥20,600 pricing remains considerably below Elliott’s target, the firm acknowledged it represents “an improved outcome” for shareholders holding minority stakes and chose to accept.
Elliott initially accumulated its 5% position at approximately ¥16,650 per share. With the ¥20,600 settlement, the firm stands to realize around 24% gains on its investment.
Though falling short of Elliott’s desired valuation, the settlement delivers meaningful returns while avoiding potentially costly litigation.
The Offer Conditions
The enhanced proposal includes specific contingencies. Toyota has indicated the increased price point requires securing loan guarantees from its banking partners.
The acquisition is being orchestrated by a group including Toyota Motor, company Chairman Akio Toyoda, and Toyota Fudosan, the group’s real estate division.
Monday’s filing came as the original tender deadline approached, prompting the announced extension.
Toyota Industries shares responded positively to the development. Toyota Motor’s U.S.-traded TM shares similarly showed strength during Monday’s early session.
Elliott’s decision to accept eliminates the possibility of legal challenges over valuation — a concern that had been hanging over the transaction.
With the tender deadline now set for March 16, shareholders have additional time to evaluate whether the ¥20,600 per share price meets their expectations.
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