Toyota plans $19bn share unwind in landmark governance reform move – Reuters

Reuters report that Toyota prepares potential $19bn share unwind in major governance reform signal.Summary:Toyota is preparing a potential ¥3 trillion (~$19bn) share sale via financial institutions to unwind cross-shareholdings, sources told Reuters.The plan could take place as early as 2026 but remains subject to change.Toyota may use buybacks to absorb shares; a secondary offering is also possible.Move seen as a landmark step in Japan’s corporate governance reform.Investors have pushed Toyota to improve capital efficiency.Comes amid scrutiny over Toyota Industries tender offer.Japan’s corporate governance reform drive may be heading toward a landmark moment, with Toyota Motor Corp preparing a potential large-scale unwinding of strategic cross-shareholdings worth around ¥3 trillion ($19 billion), according to sources cited by Reuters.The move would involve major banks and insurance companies selling Toyota shares they hold as part of longstanding reciprocal investment arrangements. The total transaction could reach roughly $19 billion, although the final scale will depend on shareholder participation and market conditions. One source indicated the plan could be executed as early as this year, though timing and structure remain fluid and the proposal could still be revised or shelved.Toyota is reportedly considering repurchasing shares through buybacks to facilitate the unwind, while a secondary sale to outside investors is also being explored as an alternative mechanism.Cross-shareholdings, where companies hold shares in business partners to reinforce strategic ties, have long been a feature of Japan’s corporate landscape. However, regulators and the Tokyo Stock Exchange have intensified pressure in recent years for companies to dismantle these arrangements, arguing they weaken shareholder accountability and entrench management. Overseas investors have frequently criticised the practice as inefficient and detrimental to capital discipline.While Toyota has previously stated its intention to gradually reduce such holdings, it has faced mounting investor scrutiny over governance and capital allocation. The potential ¥3 trillion unwind would represent one of the largest such steps taken by a Japanese corporation and could serve as a powerful signal of commitment to reform.The development comes as Toyota navigates other governance challenges, including its ongoing tender offer for Toyota Industries. The offer has encountered resistance from activist investor Elliott, which argues the proposal undervalues the company and lacks sufficient transparency. Toyota recently extended the tender deadline due to limited shareholder support.If executed, the cross-shareholding unwind would mark a significant shift in Japan’s corporate governance landscape.
This article was written by Eamonn Sheridan at investinglive.com.

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