Toyota Motor (TM) Stock Rises as Elliott Backs Toyota Industries Buyout

TLDR

• Toyota raised its tender offer for Toyota Industries to ¥20,600 ($132) per share, up from ¥18,800
• The deal now values Toyota Industries at around $40 billion
• Elliott Investment Management, holding a 7.1% stake, agreed to tender its shares under the new offer
• The deadline for the tender offer has been extended to March 16
• Toyota Motor (TM) stock moved higher on Monday following the news

Toyota Motor’s U.S.-listed stock edged up early Monday after a months-long standoff with activist investor Elliott Investment Management finally reached a resolution.

Toyota Motor Corporation, TM

Toyota raised its tender offer for subsidiary Toyota Industries — the forklift maker known by its ticker TICO — to ¥20,600 ($132) per share. That’s up from the ¥18,800 per share offer made in January.

The revised price values the deal at roughly $40 billion.

Elliott, which now holds a 7.1% stake in Toyota Industries, agreed to tender its shares under the new terms. The firm had been pushing Toyota to raise its price since revealing a roughly 3% stake back in November.

The deadline for shareholders to accept the offer has been extended by two weeks to March 16.

A Long Road to a Deal

Toyota’s original offer, made last June, was ¥16,300 ($104) per share. Elliott called it a low-ball bid and said it undervalued Toyota Industries by as much as 38%.

When Toyota raised the offer to ¥18,800 in January, Elliott again rejected it, saying it “very substantially undervalues” the unit. The firm had floated a fair value of around ¥25,000 ($160) per share.

The new ¥20,600 price is still well below that figure. But Elliott called it “an improved outcome” for minority shareholders and agreed to move on.

Elliott originally built its 5% stake at around ¥16,650 per share. At ¥20,600, the firm is looking at an implied gain of roughly 24% on that position.

It’s not the full value Elliott wanted, but it’s a real return — and the firm gets to walk away without a court battle.

The Offer Conditions

The revised offer comes with strings attached. Toyota said the price increase is dependent on securing loan guarantees from its banks.

The buyout is being led by a consortium that includes Toyota Motor, Toyota Chair Akio Toyoda, and group real estate firm Toyota Fudosan.

The filing was released on Monday, with the tender offer previously set to close that same day before the extension was announced.

Toyota Industries’ stock rallied on the news. Toyota Motor’s U.S.-listed TM stock also moved to the upside in early Monday trading.

Elliott’s agreement to accept the offer removes the risk of the activist challenging the valuation in court — a scenario that had been looming over the deal.

The tender offer deadline now sits at March 16, giving shareholders time to decide whether to accept the ¥20,600 per share price.

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