Exclusive: Toyota to Sell Shares Worth $19 Billion Through Financial Institutions, Sources Report

• The share sale could total around 3 trillion yen ($19 billion) or more, depending on financial institutions' willingness to sell their Toyota holdings
• Toyota will sell stakes in major Japanese financial institutions including Mitsubishi UFJ Financial Group and MS&AD Insurance Group, with proceeds used for share buybacks
• The move occurs amid pressure from activist investor Elliott, who opposes Toyota's tender offer for Toyota Industries as underpriced and lacking transparency

Summary: Toyota's $19 Billion Cross-Shareholding Unwind

Key Development:

Toyota Motor Corporation plans to sell approximately 3 trillion yen ($19 billion) in cross-shareholdings through financial institutions, marking a significant corporate governance reform move. The sale could potentially exceed this amount depending on partner companies' willingness to participate.

Strategic Rationale:

The automaker aims to acquire treasury shares with the proceeds from these share sales. This initiative demonstrates Toyota's commitment to unwinding strategic cross-shareholdings, a practice where companies hold shares in business partners to maintain relationships. Japanese regulators and the Tokyo Stock Exchange have been actively encouraging firms to reduce these arrangements, which are criticized for limiting capital efficiency and reducing shareholder returns.

Market Context:

As the world's largest automaker, Toyota's action signals the scale of Japan's ongoing corporate governance transformation. The company already has a policy to cut cross-shareholdings but is accelerating efforts to prove its reform commitment.

Related Developments:

The announcement comes amid Toyota's tender offer for forklift maker Toyota Industries, which has drawn opposition from activist investor Elliott. Elliott argues the deal is underpriced and lacks transparency. Toyota extended the tender offer deadline to March 2 due to insufficient shareholder acceptance.

Companies Involved:

Toyota holds cross-shareholdings with major Japanese financial institutions including Mitsubishi UFJ Financial Group and MS&AD Insurance Group. These banks and insurers have recently outlined their own policies to reduce cross-shareholdings.

Implications:

This move represents a major shift in Japanese corporate culture and could encourage other companies to accelerate similar governance reforms, potentially unlocking capital efficiency across Japan's corporate sector.