JAPAN: Toyota Motor Corporation chairman Akio Toyoda is set to face heightened scrutiny at the company’s annual general meeting on Thursday, amid shareholder concerns surrounding a ¥4.7 trillion (approximately US$33 billion or RM140 billion) deal to take a key group supplier private.
This year’s AGM, commencing at 10:00am local time (01:00 GMT), marks the first in three years where Toyoda will not be opposed by leading shareholder proxy advisory firms. Both Glass Lewis and Institutional Shareholder Services have recommended shareholders support his re-election, reversing previous opposition over governance concerns. However, the spotlight is expected to fall on a contentious transaction that has triggered strong reaction among minority shareholders of Toyota Industries Corporation, a group company being taken private.
At a separate shareholder meeting held on Tuesday, stakeholders of Toyota Industries voiced disapproval over the proposed deal, describing the offer as potentially detrimental to minority interests. The bid, structured as a multi-phase transaction, includes a proposed offer of ¥16,300 per share. While the pricing may appear favourable to Toyota Motor stakeholders, fund managers such as London-based Zennor Asset Management have raised concerns about fairness and transparency, especially with respect to the treatment of minority shareholders.
Koichi Ito, president of Toyota Industries, defended the transaction during Tuesday’s nearly two-hour meeting – the longest in the company’s history – which saw a record number of shareholder questions. Ito insisted the decision was made with comprehensive consideration and not at the expense of minority investors.
The deal outlines the creation of a new holding company, with Toyota Fudosan, an unlisted real estate business, contributing ¥180 billion. Akio Toyoda is expected to personally invest ¥1 billion, while Toyota Motor will contribute ¥700 billion in non-voting preferred shares. The transaction has attracted pushback from activist investor Oasis Management, which holds positions in both Toyota Motor and Toyota Industries and has indicated it will advocate for a higher acquisition price.
Toyota Motor has justified the move as a strategic decision aimed at enabling closer collaboration within the Toyota Group, positioning Toyota Industries to operate free from the pressures of short-term financial performance. This, the company argues, supports its ongoing transformation into a comprehensive mobility company.
Despite the easing of proxy opposition, Toyoda’s governance remains under watch. Shareholder backing for his reappointment has declined over the past three years, falling from 96% in 2022 to 72% in 2024 – the lowest ever for a Toyota board member. In an internal interview conducted last year, Toyoda acknowledged that his seat on the board could be at risk should support levels fall further.
Toyota Industries, originally founded in 1926 as Toyoda Automatic Loom Works, was the company from which Toyota Motor later emerged following the creation of its automotive division. The group has remained closely intertwined since, both operationally and through significant cross-shareholdings.
-Reuters
