By Maki Shiraki
TOYOTA CITY, Japan (Reuters) -Toyota Motor Chairman Akio Toyoda is likely to face scrutiny over a $33 billion take-private deal of a key supplier when shareholders assemble for the Japanese automaker’s annual general meeting on Thursday.
This year’s gathering, set to kick off at 10:00 a.m. (0100 GMT), marks the first time in three years that Toyoda isn’t being opposed by a shareholder proxy adviser.
Nevertheless, the grandson of the automaker’s founder is likely to face some tough questions about governance – if this week’s meeting of supplier Toyota Industries is anything to go by.
Shareholders of forklift maker Toyota Industries on Tuesday voiced disapproval of the 4.7 trillion yen ($33 billion) take-private bid from its parent that they said was unfair to minority shareholders. The world’s top-selling automaker plans to take its supplier private in a complex, multi-part transaction that includes an offer price of 16,300 yen a share.
While the price might be a good deal for Toyota Motor shareholders, critics of the bid, including London-based Zennor Asset Management, have raised concern about the transaction, particularly around the treatment of minority shareholders.
“This was not a decision that neglected minority shareholders, but rather one that was taken with all the factors in mind,” Toyota Industries’ President Koichi Ito told shareholders on Tuesday.
Under the deal, a new holding company will be set up. Unlisted real estate company Toyota Fudosan will invest 180 billion yen while Toyoda will invest 1 billion yen. Toyota Motor will invest 700 billion yen for non-voting preferred shares.
Tuesday’s meeting ran for almost two hours, Toyota Industries’ longest ever, the company said. Executives also took some two dozen questions from shareholders, the most ever.
Hong Kong-based Oasis Management, which has shares in both Toyota Motor and Toyota Industries, has said it would push for a higher price.
Toyota has said the acquisition would allow Toyota Industries to deepen collaboration with group companies, without concerns of short-term profit targets, as Toyota itself becomes a broader “mobility company”.
This year, prominent proxy advisory firms Glass Lewis and Institutional Shareholder Services have both recommended that shareholders re-elect Toyoda. Glass Lewis had recommended voting against him the previous two years and ISS had last year. Toyoda’s position at the automaker had come under scrutiny over broader governance concerns. Neither proxy adviser gave specific reasons for the change in their recommendations this year.
Toyoda has seen shareholder support slip in recent years. He was re-elected to the board with 72% backing in 2024, in what he later said marked the lowest support rating ever for a Toyota director. That was down from 85% and 96%, respectively, in the prior two years.
In a July 2024 interview by Toyota’s own news outlet, Toyoda said his seat on the board could be at risk if shareholder support continued to fall.
Toyota Industries, formerly Toyoda Automatic Loom Works, was founded in 1926 to make automatic looms. An automotive division within the company was set up and later spun off as Toyota Motor.
(Reporting by Maki Shiraki. Writing by David Dolan. Editing by Mark Potter)
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