Toyota Chairman Akio Toyoda is spearheading a proposed ¥6tn ($42bn) buyout of Toyota Industries, the automaker’s largest subsidiary, in a landmark move to streamline governance and solidify control across the Toyota group.

The proposal, which could include Toyoda’s personal capital alongside financing from Japan’s three largest banks, aims to take Toyota Industries private amid rising pressure from shareholders and regulators to unwind complex corporate crossholdings. With a current market cap of ¥4.3tn, Toyota Industries plays a central role within the Toyota ecosystem, not only as a key supplier of components and industrial equipment but also as a 9.1% shareholder in Toyota Motor itself.

While discussions remain at an early stage and may still collapse, the move is seen as a response to mounting calls for Japanese corporates to improve transparency and governance. The Tokyo Stock Exchange has pushed for the reform of parent-child listings, with activist investors increasingly targeting Japanese auto suppliers in anticipation of structural changes.

Private equity firms have reportedly explored participating in the proposed transaction or acquiring spun-out segments of the business. Bain Capital and KKR, among others, have been active in Japan’s industrial sector and may view a carve-out opportunity as an attractive entry point.

Toyota has previously absorbed key suppliers such as Toyota Auto Body and Kanto Auto Works, and a full acquisition of Toyota Industries would mark the company’s largest internal consolidation move to date. Shareholder support for Akio Toyoda has declined, prompting changes to Toyota’s board and wider corporate reforms ahead of the company’s next annual meeting.

If the deal progresses, it could become one of the most significant corporate restructurings in Japan’s recent history—and a signal to global investors that Japan’s corporate governance reform is beginning to drive high-profile action.

Source: Financial Times