Toyota Motor may have revised its offer for Toyota Industries 15% higher, but that hasn’t satisfied activist shareholder Elliott, which said on Thursday that the planned buyout “very substantially” undervalued the forklift maker.
Elliott Investment Management, which disclosed a stake in Toyota Industries in November and raised its holding to 5% last month, said it would not be tendering its shares under the improved terms and would be encouraging other shareholders to follow its lead.
Toyota Motor, its Chairman Akio Toyoda and group real estate company Toyota Fudosan on Wednesday lifted their offer for Toyota Industries to 18,800 yen per share, valuing it at roughly 5.6 trillion yen ($35 billion).
Toyota industries shares extend gains
“Toyota Industries owns high-quality, market-leading businesses and valuable financial assets that Elliott believes, based on its empirical work, together are worth more than ¥25,000 per share,” the U.S. firm said in a statement.
Toyota Industries’ shares extended gains on Friday, trading at 19,400 yen, about 3% higher than the new bid price and having climbed about 8% over the past two days.
Toyota Motor said in a statement on Friday that it was aware of Elliott’s statement and would continue to closely monitor the situation.
Toyota Fudosan and Toyota Industries said they believed the latest offer price represented a level that reflected the firm’s intrinsic value and would engage in sincere dialogue with investors. Toyota Fudosan added that it had had thorough discussions with Toyota Industries about the latest offer price.
Toyota initially proposed an offer price of 16,300 yen for the buyout, which will strengthen the Toyoda founding family’s control of the Toyota group. That bid was widely criticised by global investors for what they called an opaque valuation.
Analysts question logic of new offer
The value of Toyota Industries’ stakes in other Toyota group companies has risen since the planned buyout was announced, thanks to climbs in share prices across the group.
Toyota’s Chief Financial Officer Kenta Kon, who also serves as a director at Toyota Fudosan, said on Wednesday the higher price reflected changes in the economic environment and Toyota Industries’ business since June.
But that has also prompted some analysts to question the logic behind the latest offer.
“If they believe that 18,800 reflects not only the higher market prices and the lower tax aspect of it, then it implies that they’ve downgraded their value of the underlying business,” said Stephen Codrington, founder of Codrington Japan, an independent research company.
He added that investors may wait until late in the tender period to see if Toyota sweetens the terms again.
