Toyota Chairman Suggests Potential USD 42 Bn Acquisition of Toyota Industries

Toyota Motor Chairman Akio Toyoda has proposed acquiring supplier Toyota Industries for 6 trillion yen ($42 billion), Bloomberg News reported on Friday.

Following receipt of the proposal, Toyota Industries, which manufactures parts for the automaker, formed a special committee and hired advisers to review the offer, according to Bloomberg, citing sources.

If completed, the transaction would represent a massive buyout for corporate Japan, giving Toyoda, the grandson of the automaker's founder, complete control over one of the sprawling Toyota group's major companies. Toyota Industries, which began as a manufacturer of textile looms, is the company from which Toyota Motor eventually arose, giving it symbolic significance within the group.

Today, it manufactures textile machinery, car engines, electronics, and stamping dies.

Outside of regular business hours, no one at Toyota Motor or Toyota Industries was immediately available for comment.

The potential transaction comes as Japan experiences an increase in both management buyouts and corporate acquisitions. Many of the transactions have been motivated by expectations that a corporate governance overhaul will result in higher shareholder returns, as well as the belief that the economy has finally turned a corner following years of painful deflation.