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Elliott Management, one of the world’s most prominent activist investors, has taken a significant stake in Toyota Industries, putting itself in the middle of one of the world’s largest and most controversial take-private attempts.
Toyota Industries, which makes forklifts, car parts and textile looms, disclosed in a filing on Tuesday that Elliott had taken a stake of more than 3 per cent by the end of September. That position, say people familiar with the matter, has since increased to just under 5 per cent.
Elliott has told management that the price being offered by Toyota Motors of ¥16,300 a share to take the company private was too low.
Toyota Industries shares have risen almost 36 per cent this year to close at ¥17,250 on Tuesday.
In a statement on Tuesday, Elliott confirmed “a significant investment in Toyota Industries and that it has been sharing its views with the company’s management team, board and other constituents regarding the proposed transaction”.
Elliott added that it “believes the proposed transaction very significantly undervalues Toyota Industries and reflects a process that has lacked transparency and has fallen short of proper governance practices”.
Toyota Industries said: “We have been engaging in continuous and constructive dialogue with our shareholders in a sincere and respectful manner, and we will continue to do so.”
Earlier this year, Toyota Motors moved to take its biggest subsidiary private in a ¥4.7tn ($30.6bn) deal that includes ¥1bn of chair Akio Toyoda’s personal funds and has attracted a storm of criticism from investors and corporate governance experts.
Those same people point to the situation as evidence that, despite a decade of progress on governance reform, even some of Japan’s largest and most closely scrutinised companies remain resistant to change.
Unwinding the cross-shareholdings between Toyota and its subsidiary would answer long-standing critics who say such arrangements have protected underperforming companies and management by giving them guaranteed support.
However, this proposed deal from Toyota has seen institutional investors, privately and publicly, decry an alleged lack of transparency and perceived low value.
Last month, the Asian Corporate Governance Association released a letter sent to the boards of Toyota and Toyota Industries calling on them to provide more disclosure on the valuation methodology used in the take-private move, quantify the synergies and explain how the board “oversaw and addressed conflicts of interest issues”.
Toyota Industries has previously argued that the valuation was deemed to be fair based on assessments by external advisers to the company and its special committee.
Toyoda has also denied that the deal strengthens his control over the company and said it would allow Toyota Industries to pursue long-term growth.