Toyota Motor (TM) Shares Climb After Elliott Accepts Revised Toyota Industries Tender Offer

Key Takeaways

• Toyota increased its buyout offer for Toyota Industries to ¥20,600 ($132) per share from the previous ¥18,800 bid
• The enhanced proposal values Toyota Industries at approximately $40 billion
• Elliott Investment Management, which controls a 7.1% position, has accepted the revised terms
• The tender offer deadline has been pushed back to March 16
• Shares of Toyota Motor (TM) traded higher on Monday in response to the announcement

Shares of Toyota Motor’s U.S.-traded stock gained ground early Monday as the automaker successfully ended a protracted dispute with activist hedge fund Elliott Investment Management.

Toyota Motor Corporation, TM

The Japanese automotive giant increased its acquisition bid for affiliate Toyota Industries — the industrial equipment manufacturer trading as TICO — to ¥20,600 ($132) per share. This represents a significant increase from the ¥18,800 per share proposal announced in January.

The updated valuation places the transaction at approximately $40 billion.

Elliott, which currently maintains a 7.1% ownership position in Toyota Industries, has committed to accepting the revised offer. The activist investor had been advocating for a higher valuation since disclosing an initial stake of roughly 3% in November.

Shareholders now have until March 16 to accept the tender offer, following a two-week extension.

A Protracted Negotiation

Toyota’s initial proposal, launched last June, stood at ¥16,300 ($104) per share. Elliott characterized this as an inadequate offer, arguing Toyota Industries was undervalued by up to 38%.

Following Toyota’s revised January offer of ¥18,800, Elliott once again declined, stating the bid “very substantially undervalues” the company. The investment firm had suggested a fair valuation in the neighborhood of ¥25,000 ($160) per share.

While the latest ¥20,600 price point remains considerably below Elliott’s target, the firm acknowledged it represents “an improved outcome” for minority stakeholders and decided to support the transaction.

Elliott initially accumulated its 5% stake at an average price of approximately ¥16,650 per share. With the ¥20,600 tender price, the investment firm stands to realize a gain of about 24% on its investment.

Though falling short of Elliott’s desired valuation, the return is substantial — and allows the firm to exit without protracted litigation.

Terms and Conditions

The enhanced offer includes certain stipulations. Toyota disclosed that the price adjustment is contingent upon obtaining loan guarantees from its banking partners.

The acquisition is being orchestrated by a consortium featuring Toyota Motor, Toyota Chairman Akio Toyoda, and affiliated property company Toyota Fudosan.

The regulatory filing was published Monday, the same day the tender offer was originally scheduled to conclude before the extension was granted.

Shares of Toyota Industries surged on the development. Toyota Motor’s U.S.-listed TM stock similarly posted gains during early Monday trading.

Elliott’s decision to back the offer eliminates the threat of legal action over valuation — a possibility that had cast uncertainty over the transaction.

With the tender deadline now set for March 16, shareholders have additional time to evaluate whether to accept the ¥20,600 per share offer.

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