Japan’s auto giant Toyota Motor Corporation is preparing a large-scale unwinding of strategic cross-shareholdings that could see banks and insurers sell about $19 billion (around 3 trillion yen) worth of its shares, according to sources.
| Photo Credit:
FRANCIS MASCARENHAS
Toyota plans a
large-scale unwinding of strategic shareholdings that would
involve banks and insurance firms selling around $19 billion of
its shares, two sources said, in what would mark a watershed
moment in Japan’s corporate governance reform.
The sale will likely total around 3 trillion yen ($19
billion) but could be larger depending on the willingness of
shareholders to sell, the sources said. Toyota aims for the sale
to happen as early as this year, although the timing and scale
could change depending on shareholders – or the plan could be
abandoned, one of the sources said.
Reuters is reporting Toyota’s preparations for the first
time. Toyota declined to comment. The sources declined to be
identified because the information is not public.
Toyota’s shares extended gains following Reuters’ report.
They were up around 2% in early afternoon trade, outperforming
the broader market.
Toyota aims to acquire shares through buybacks, the sources
said. A secondary sale to other investors has also emerged as an
option, one of the sources said.
The move by the world’s largest automaker would be evidence
of the scale of Japan’s on-going corporate governance reform.
Regulators and the Tokyo Stock Exchange have been encouraging
Japanese companies to unwind their cross-shareholdings.
The practice, which involves firms holding shares in each
other to cement business ties, has long been criticised by
governance experts and overseas investors as insulating
management from shareholders. Although widespread in Japan for
decades, it has been less common in the West.
While Toyota has a policy to cut its cross-shareholdings, it
has also come under fire over governance and has faced calls
from investors to improve capital efficiency.
Toyota wants to demonstrate its seriousness about governance
reform by unwinding the strategic shares, one of the sources
said.
The automaker is in the midst of a tender offer for forklift
maker Toyota Industries. Activist investor Elliott
opposes the deal, arguing it is underpriced and lacks
transparency. Toyota has extended the tender offer to March 2
due to insufficient shareholder support.
Toyota shareholders include banks such as Sumitomo Mitsui
Financial Group and Mitsubishi UFJ Financial Group
and insurers such as MS&AD Insurance Group.
Japanese banks and insurers have in recent years outlined
policies to reduce their cross-shareholdings.
Published on February 26, 2026