^{Photo: Bloomberg.com}

Shares of Toyota Industries climbed to a record high after Toyota Motor raised its takeover offer, intensifying market expectations that the deal could be further sweetened and setting the stage for one of Japan’s most closely watched corporate buyouts in years.

The forklift and industrial equipment maker’s stock jumped nearly 6% to around 19,080 yen on Thursday, moving decisively above Toyota Motor’s revised tender offer price. The rally signals that investors believe the improved bid may still undervalue the company and that further negotiations or pressure from shareholders could push the price higher.

Toyota raises the stakes on privatization plan

Toyota Motor said late Wednesday that it had increased its buyout offer for Toyota Industries to 18,800 yen per share, up from 16,300 yen previously. The revised price represents an increase of more than 15% and values the transaction at over $35 billion, reinforcing Toyota’s intention to take the group company private.

The higher bid follows resistance from Toyota Industries, which in December publicly stated that it had requested a better offer, citing concerns that the earlier proposal did not adequately reflect the company’s value or ensure shareholder approval.

Toyota Motor’s shares also rose more than 2% following the announcement, suggesting investors see strategic merit in consolidating control despite the higher acquisition cost.

Market signals point to expectations of more upside

Toyota Industries’ shares trading above the tender offer price is a clear signal that the market anticipates either an improved bid or potential intervention by activist investors. Analysts note that while the revised offer marks an all-time high valuation for the company, it may still fall short of fair value.

Equity research specialists have pointed out that the offer sits below the midpoint of valuation ranges prepared by independent advisers, reinforcing the perception that Toyota Industries remains undervalued even after the price increase.

Activists likely to push back

Market watchers expect activist investors to play a meaningful role as the deal progresses. Some analysts have described the transaction as one of the most mispriced large-scale takeovers seen in Japan in recent years, increasing the likelihood of shareholder campaigns demanding a higher price or attempting to block the deal altogether.

Toyota Industries’ diverse business portfolio strengthens the activists’ case. The company manufactures forklifts, engines, electronic components, and stamping dies, and it has historically been viewed as a cornerstone asset within the broader Toyota group.

Deal structure and financial backdrop

Toyota Motor had initially outlined plans to acquire the group company for approximately 4.7 trillion yen. The proposed structure included a personal investment of 1 billion yen from Toyota Motor Chairman Akio Toyoda, along with around 700 billion yen from Toyota Motor in the form of non-voting preferred shares.

The push to take Toyota Industries private comes at a time when Toyota Motor itself is navigating a more challenging operating environment.

Headwinds for Toyota Motor

Toyota Motor recently reported that global production fell 5.5% year on year to 821,723 vehicles in November, marking its first annual decline in six months. Global sales also dropped 2.2%, weighed down in part by weaker demand in China after local governments scaled back vehicle purchase subsidies.

The automaker has also warned of a significant impact from U.S. tariffs, estimating a hit of about 1.45 trillion yen, or more than $9 billion, for the financial year ending in March. These pressures add complexity to the timing and scale of the buyout.

Long-term strategy remains intact

Despite near-term challenges, Toyota Motor continues to double down on its long-term global manufacturing strategy. Last November, the company announced plans to invest $912 million across U.S. manufacturing facilities in five Southern states. This investment forms part of a broader commitment to spend up to $10 billion in the United States by 2030.

As investors digest the revised offer, attention is now firmly on whether Toyota Motor will further raise its bid or face sustained resistance from shareholders. With Toyota Industries trading above the offer price and activist interest building, the deal appears far from settled.

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