Daniel Leussink
TOKYO (Reuters) – Toyota Motor and two of its subsidiaries will sell at least a 12.5% stake in supplier Aisin, the companies said. The $1 billion deal raised hopes that the automaker could boost sales of its cross-shareholdings.
Other sellers are Denso and Toyota Industries (OTC:), Aisin said on Thursday. The company will repurchase some of its shares on the open market in an attempt to mitigate the impact of the deal on its share price.
The sale price for the shares has not yet been determined, Aisin said. Reuters calculations based on the share price at the time the deal closed showed the deal was worth 177.5 billion yen ($1.11 billion).
The announcement follows a similar move by Toyota (NYSE:), Aisin and Toyota Industries in November, when they said they would sell shares in auto parts maker Denso, raising hopes among investors of a further reduction in cross-shareholdings.
“The problem is nearing resolution, although (Aisin’s) share price is likely to fall first due to deteriorating supply and demand,” said Seiji Sugiura, an analyst at Tokai Intelligence Laboratory.
The extent of Toyota’s cross-shareholdings and the pace at which the world’s best-selling automaker is selling them is being closely watched by the market, given its influence and status in corporate Japan.
Toyota is seeking to capitalize on stakes in subsidiaries as it ramps up development and production of battery-powered vehicles. The company intends to review its capital links with other group companies separately, the statement said.
The decision to cut its stake in Aisin, which Toyota said it would cut to 20% from 24.8% of outstanding shares, also came after shareholder support for Toyota Chairman Akio Toyoda fell to a record low at its annual general meeting last week. .
As part of the deal, Denso and Toyota Industries will each sell just under 13 million shares through a secondary offering, while Toyota will sell about 7.9 million shares, Aisin said in a statement.
Toyota plans to sell another 5 million shares as part of the general offering.
In a separate statement, Aisin said it would carry out a 3:1 stock split later this year.
Denso and Aisin separately sold stakes in several Toyota Group companies as of the fiscal year ended in March, regulatory filings showed last week.
Japanese companies have traditionally acquired stakes in subsidiaries and business partners (a practice known as cross-shareholding), but have been forced to dissolve those assets to improve their use of capital.
The practice has drawn scrutiny from Japan’s financial regulator in recent years, with investors closely watching the rollback of cross-shareholdings as they hope such moves will boost the country’s stock market.
($1 = 160.4500 yen)