Toyota plans $19bn share unwinding in governance shift

Toyota Motor Corp is preparing a massive unwinding of strategic holdings that could see banks and insurers sell about $19 billion worth of shares, sources told Reuters.

If completed, the move would mark one of the biggest steps yet in Japan’s push for corporate governance reform.

The sale, estimated at around 3 trillion yen, could happen as early as this year. However, the timing and final size depend on shareholder willingness. One source said the plan could still be changed or even abandoned.

A Shift Away From Cross-Shareholdings

The plan targets long-standing cross-shareholdings, a practice where companies own shares in each other to strengthen business ties.

Overseas investors have long criticised this system, saying it protects management and weakens capital efficiency. Regulators and the Tokyo Stock Exchange have urged companies to unwind such arrangements.

Toyota has said it wants to reduce these holdings. This potential sale would show how serious it is.

Share Buybacks and Market Reaction

Sources said Toyota aims to acquire shares through share buybacks. A secondary sale to outside investors is also being considered.

Toyota’s stock rose 1.5%, outperforming the broader market.

Pressure from activist investors

The move comes as Toyota faces scrutiny over governance. The company is pursuing a tender offer for Toyota Industries Corp. Activist investor Elliott Management has opposed the deal, arguing it is underpriced and lacks transparency.

Toyota recently extended the tender offer deadline to March 2 due to insufficient shareholder support.

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