Toyota plans $24 billion unwinding of strategic shareholdings in watershed move

Carmaker plans around $24 billion share sale by financial institutions, sources say. Read more at straitstimes.com.

TOKYO - Toyota plans a large-scale unwinding of strategic shareholdings that would involve banks and insurance firms selling its shares, two sources said, in what would mark a watershed moment in Japan’s corporate governance reform.

The sale will likely total around 3 trillion yen (S$24 billion) but could be larger depending on the willingness of shareholders to sell, the sources said. Toyota aims for the sale to happen as early as 2026, although the timing and scale could change depending on shareholders - or the plan could be abandoned, one of the sources said.

Toyota aims to acquire shares through buybacks, the sources said. A secondary sale to other investors has also emerged as an option, one of the sources said.

The move by the world’s largest automaker would be evidence of the scale of Japan’s on-going corporate governance reform. Regulators and the Tokyo Stock Exchange have been encouraging Japanese companies to unwind their cross-shareholdings.

The practice, which involves firms holding shares in each other to cement business ties, has long been criticised by governance experts and overseas investors as insulating management from shareholders. Although widespread in Japan for decades, it has been less common in the West.

While Toyota has a policy to cut its cross-shareholdings, it has also come under fire over governance and has faced calls from investors to improve capital efficiency.