Toyota Motor announced plans to buy back ¥806.8 billion ($5.2 billion) worth of its stock from major Japanese banks and insurers, marking a strategic move to unwind longstanding shareholdings with financial partners. In a statement, Toyota revealed that Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, Tokio Marine Holdings, and MS&AD Insurance Group Holdings are all tendering their shares at a discounted price of ¥2,781 apiece, representing an 11% discount to the closing price on Tuesday.
This buyback initiative is part of Toyota’s larger ¥1 trillion repurchase plan announced in May. By engaging in these buybacks, Toyota aims to comply with the Japanese government’s efforts to encourage big enterprises to unravel cross-held shareholdings established over decades to solidify business relationships. While this move promotes accountability for management and enhances governance, major banks and businesses have been slow to unwind their holdings. The scale and significance of Toyota’s buyback deal could potentially trigger a broader trend of looser equity ties within Japan’s corporate landscape.