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

Big privatization deals tend to go well in Japan. Minority shareholders grumble a little at first, maybe even push back a little, but eventually they have to accept whatever is put on the table by the big companies. But Toyota recently learned the hard way that this engine may change.

The Japanese automaking giant has actually been strong-armed by Elliott Investment Management, one of the world’s largest activist funds, to pay 20,600 yen per share in its bid to take Toyota Industries private. Toyota Industries is the company behind Toyota brand products such as jet looms and forklifts, and is actually the world’s largest manufacturer of the latter. The deal will take Toyota Industries’ valuation to $37.8 billion.

But how does this happen? To understand that, we’ll have to go back to June 2025. That’s when the Toyota group first proposed to buy Toyota Industries for 16,300 yen a share. A few shareholders were not happy with the deal, and some overseas investors even took the issue directly to the Tokyo Stock Exchange, as reported by Reuters. That’s when Elliott stepped in and started buying stocks. As of the March 2 filing, it had made a 7.7% stake worth $3 billion.

Elliott didn’t just buy stocks; it also ran an aggressive campaign, releasing its Toyota Industries plan that paints 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 saying it was “the best price.” But that wasn’t enough, and it later had to increase the offer by another 9.6%, the amount Elliott finally agreed to.

So Elliott found its value and agreed to tender its shares. But for some of the few shareholders who still hold stock in Toyota Industries, the picture is not so good. Toyota and Toyota Industries pitched the acquisition as a way for the latter to shift their focus to mobility technology without being constrained by short-term profit expectations. It’s the opposite, at least in theory. However, what it does not address is the concern expressed by several analysts and investors regarding this deal, as reported by outlets such as Reuters. This includes factors such as how it is valued and whether it is fair to minority shareholders who do not have Elliott’s power to negotiate a better outcome.

That last point is particularly controversial. Toyota needs at least 42.01% of minority shareholders to agree to the tender before the deal goes through. But other Toyota brands such as Aisin, Denso, and Toyota Tsusho together own about 12.21% of Toyota Industries and are classified as minority independent shareholders. This effectively lowers the threshold required by Toyota for foreign investors. Critics have called that questionable.

Either way, shareholders now have until March 16 to decide whether to sell their shares. But there is not much to decide here, as for many of them, there may be no choice left. Elliott had the most leverage to back out of the deal, and now that the fund has agreed to sell shares to Toyota, that leverage is gone.