Toyota Motor announced on Tuesday its intention to initiate a 807 billion yen (USD 5.16 billion) tender offer to repurchase its own shares. This move comes amidst a governance drive by the Tokyo Stock Exchange, which has prompted major corporations to unwind their cross-shareholdings. In Japan, the practice of companies holding stakes in each other has historically strengthened business relationships.
However, governance experts and international investors argue that it can result in weaker corporate oversight by shielding management from shareholder influence. According to Bloomberg News last month, major banks Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group are planning to divest Toyota shares totaling USD 8.5 billion. Toyota confirmed in a statement that its tender offer will be priced at 2,781 yen per share and will be open from July 24 to August 26.
Additionally, SMFG, Tokio Marine Holdings, and MS&AD Insurance Group have announced plans to sell back Toyota shares to the automaker. Earlier this month, a filing indicated that several Japanese financial groups, including Tokio Marine, Sompo, and two units of MS&AD, intended to sell Honda Motor shares amounting to 535 billion yen.
These developments reflect a broader trend in Japan’s corporate landscape as companies reassess their equity holdings amid regulatory pressures and evolving governance standards. Toyota’s buyback initiative underscores its commitment to enhancing shareholder value and aligning with modern corporate governance principles.