TOKYO – Toyota will plow a $2 billion windfall from selling shares in its top supplier Denso and into batteries, hydrogen technologies and software, as the world’s biggest automaker realigns cross-shareholdings among its group companies to free up investment funds.
The planned sale, announced on Wednesday, will reduce Toyota’s stake in Denso, the world’s second-biggest auto parts suppliers, to 20 percent from about 24.2 percent today.
The impending sale is part of a coordinated move by other Toyota Group suppliers, including Aisin and Toyota Industries, to also trim their holdings in Denso.
Toyota, Denso’s largest shareholder and the world’s biggest automaker, will sell some 124.9 million shares for about 287 billion yen ($1.9 billion) based on Denso’s latest stock price.
The final haul from selling down Toyota’s stake will be determined by Denso’s share price at the time of the transaction, which is expected sometime in mid-December.
Denso shares rose 0.9 percent to close at 2,298 yen ($15.52) on the Tokyo Stock Exchange on Thursday after Japan’s Nikkei business daily reported the sale.
Denso said plans to spend up to 200 billion yen ($1.35 billion) to buy back a large portion of the shares to buoy the stock price.
Toyota’s stock rose 1.7 percent as investors cheered the news of freeing up billions of funds locked into inactive positions in group companies. Masahiro Yamamoto, chief officer of Toyota’s accounting group, said Toyota was in talks to reduces its shares in other suppliers as well.
But Yamamoto said Toyota was not thinking of completely exiting its positions in the companies.
The unwinding of shares across the Toyota Group comes as Toyota and its partners race to raise funds for developing a wave of new technologies being rolled out across the industry.
Toyota eyes fortifying investment in electrification, software and hydrogen, Yamamoto said.
Transmission and brake-maker Aisin, the world’s seventh-largest supplier, intends to sell about 50.2 million shares. Toyota Industries, which makes engine parts, batteries and electronics, as well as forklifts and textile weaving machines, intends to sell 119.8 million shares.
The combined offerings of all three companies’ shares in Denso would amount to a sale of about 677.5 billion yen ($4.57 billion, based on Denso’s latest closing stock price).
Toyota Industries is Denso’s third-largest shareholder with a 9.3 percent stake, and Aisin ranks No. 8 with its 1.7 percent holding. Toyota Industries will reduce its stake; Aisin will liquidate its.
The upcoming divestment follows a similar move in July, when Toyota said it would sell a big stake in Japanese telecom company KDDI amid plans to invest more in EV technologies.
Denso ranks No. 2 on the Automotive News Europe list of the top 100 global suppliers, with estimated worldwide sales to automakers of $47.9 billion in 2022.
