Toyota (TM) to Take Its ‘Industries’ Unit Private in Blockbuster $33 Billion Deal

Toyota Industries Corp. (JP:6201), the original company behind the world’s largest automaker, is being taken private for $33 billion by the founding Toyoda family.

Analysts say the privatization of Toyota Industries will give the Toyoda family a tighter grip on Japan’s biggest business empire for much less than its current market value. The deal ranks among the biggest corporate buyouts ever.

The proposed deal includes a tender offer for each share of Toyota Industries at an 11% discount to the stock’s closing price in Japan on June 3. Toyota Industries today is primarily a supplier of textile looms, forklifts and vehicle parts. The deal does not impact vehicle manufacturer Toyota Motor Corp. (TM) or its status as a publicly traded company.

Detangling

The effort to buyout Toyota Industries Corp. and take the concern private comes as Japan’s government encourages domestic companies to unwind cross-held shares with subsidiaries and other businesses. A new holding company will be established to privatize Toyota Industries, according to a news release. That entity will mostly be owned by Toyota Fudosan Co., a privately held real estate firm.

Shareholders of Toyota Industries will vote on the tender offer this coming December. Toyota Industries was founded by Sakichi Toyoda, whose son Kiichiro went on to found carmaker Toyota Motor Corp. Toyota has become the world’s largest automaker with annual production of more than 11 million vehicles. The buyout comes as Toyota seeks to rebuild trust after a series of regulatory scandals.

TM stock has declined 2% this year.

Is TM Stock a Buy?

Only one Wall Street analyst currently covers Toyota Motor Corp. stock. So instead, we’ll look at the three-month performance of the share price. As one can see in the chart below, the stock has risen about 5% in the last 12 weeks.