Toyota Chairman Proposes Record USD 42 Bn Buyout of Key Supplier

Toyota Motor Corp. Chairman Akio Toyoda has proposed a buyout of Toyota Industries Corp. in an effort to solidify his grip on Japan's largest business empire as the country experiences a surge in merger and acquisition activity.

Toyota Industries, which manufactures looms for textile manufacturing and parts for Toyota's cars, is valued at ¥6 trillion ($42 billion) in the proposal, a roughly 40% premium over its market capitalization at the close Friday, according to reports.

Toyota Industries, the company founded by Toyoda's great-grandfather Sakichi that eventually became the world's largest automaker, formed a special committee after receiving the proposal and hired advisers to assess its viability.

Although Akio is chairman of Toyota Motor, his direct ownership of the company is less than 1%, while Toyota Industries owns a 9.1% stake. The acquisition would strengthen Akio's position and influence within the larger Toyota group, which includes suppliers and stakes in other companies, including rival automakers.

A deal would be one of the world's largest buyouts ever. Discussions are still ongoing, and the transaction may not proceed in its current form, if at all.In a statement, Toyota Motor said it was considering various options, including a partial investment in Toyota Industries, but nothing had been decided. Toyota Industries said in an emailed statement that it is considering all options, including capital policies, to increase the group's corporate value, but no decision has been made.