Investors have called on Toyota Motor to disclose more information about its planned buyout of group firm Toyota Industries, criticizing what they said was “opaque” valuation and a failure to safeguard the interests of minority shareholders.
Toyota Industries, a maker of forklifts and a key supplier to the Japanese automaker, is to be taken private by Toyota, group real estate company Toyota Fudosan and Toyota chairman Akio Toyoda.
A letter which was made public on August 8 letter from some two dozen asset managers including AllianceBernstein, Neuberger Berman and Schroders, is likely to intensify scrutiny of a deal that promises a landmark unraveling of cross-shareholdings and to tighten the impact of the founding Toyoda family within the group.
The negotiation is being closely watched as it is about an overhaul of the country’s main corporate group and coincides with a push by regulators and the government for better corporate governance.
The proposed deal includes a 3.7 billion yen ($24.5 billion) tender offer for shares of Toyota Industries at 16,300 yen apiece, which represents around a 23% premium to the share price before word of the deal broke in April.
That is well below the 44% average premium in similar deals based on Tokyo Stock Exchange data, the investors said.
The transaction has the potential to “either reinforce or weaken the progress made in corporate governance reforms,” the investors said in the letter. It was sent by the Asian Corporate Governance Association (ACGA), which represents asset managers in the region, and was signed by global institutional investors.
“Central to our concerns is the lack of full valuation disclosure,” the investors said. They called for the release of all valuation models, tax assumptions and third-party appraisals used to determine the offer price.
Toyota said in a statement that it had engaged in “multiple rounds of constructive dialogue” with ACGA and has sought to provide thorough explanations of its position.
“The negotiations between the independent companies involved in this transaction have been conducted in good faith through a fair and independent process, with sufficient consideration given to the interests of minority shareholders,” it said.
They investors asked Toyota’s board to clarify how it managed and addressed the potential conflict of interest between Chairman Akio Toyoda’s direct investment and other shareholders.
