$38B Toyota Deal Proposed After Massive Pressure From Activist Investors

Big privatization deals tend to go pretty smoothly in Japan. The minority shareholders grumble a bit initially, maybe even push back a little, but ultimately they have to accept whatever's put on the table by the larger companies. But Toyota has just learnt the hard way that this dynamic could be changing.

The Japanese automaking giant has essentially been strong-armed by Elliott Investment Management, one of the largest activist funds in the world, into paying 20,600 yen per share in its attempt to take Toyota Industries private. Toyota Industries is the company behind Toyota-branded products like jet looms and forklifts, and is actually the world's largest manufacturer of the latter. This deal would take Toyota Industries' valuation up to roughly $37.8 billion.

But how did this happen? To understand that, we'll have to go back to June 2025. That's when the Toyota group first proposed buying out Toyota Industries at 16,300 yen a share. Minority shareholders were not happy about the deal, and some overseas investors even went so far as to take the matter directly to the Tokyo Stock Exchange, as Reuters reported. That's when Elliott stepped in and started buying shares. As of the filing on March 2, it had built up a 7.7% stake worth around $3 billion.

Elliott didn't just buy shares; it also ran an aggressive campaign, releasing its own plan for Toyota Industries that painted a future where the company's shares could hit more than 40,000 yen a share. Toyota tried to hold the line: In January, it raised the offer to 18,800 yen, later claiming that it was the "best possible price." But that wasn't enough, and it later had to increase the offer by another 9.6%, a price to which Elliott finally agreed.

So Elliott got its price and agreed to tender its shares. But for the rest of the minority shareholders still holding stock in Toyota Industries, the picture isn't quite as rosy. Toyota and Toyota Industries had pitched the buyout as a way for the latter to shift its focus towards advanced mobility technology without being weighed down by short-term profit expectations. That's the upside, at least in theory. What it doesn't address, though, are the concerns that several analysts and investors have raised about the deal, as reported by outlets such as Reuters. This includes factors like the way it was valued and whether it's actually fair to the smaller shareholders who don't have Elliott's leverage to negotiate a better outcome.

That last point is especially contentious. Toyota needs at least 42.01% of minority shareholders to agree to tender before the deal can go through. But other Toyota-owned brands like Aisin, Denso, and Toyota Tsusho collectively own about 12.21% of Toyota Industries and are classified as independent minority shareholders. This effectively lowers the threshold that Toyota actually needs from outside investors. Critics have called that questionable.

Either way, shareholders now have until March 16 to decide whether to sell their shares. But there's not much to decide here, as for many of them, there may not be much of a choice left. Elliott was the biggest force pushing back against the deal, and now that the fund has agreed to sell its shares to Toyota, that leverage is gone.