According to two people familiar with the situation, Toyota (7203.T) group firms want to reduce their stakes in car supplier Denso (6902.T) by selling around 10% of the business by year’s end in a share sale that is probably worth about $4.7 billion.
According to the two sources, Toyota Motor’s share will account for over half of the approximately 10%, with the entire sale estimated at current market values of around 700 billion yen ($4.7 billion).
Following the sale, Toyota Motor, which held 24.2% of Denso at the end of September, is anticipated to continue holding the most significant stake in the business.
The sources, who wished to remain anonymous due to the confidentiality of the situation, claim that Denso intends to independently repurchase a portion of its shares on the open market to counteract any possible negative impact on its share price. A representative for Toyota stated that the company could not comment on Denso and had not made any announcements on the share sale that were included in the Reuters story.
A representative for Denso declined to comment. The second-largest automotive component manufacturer in the world is Denso, a major supplier to Toyota. According to the sources, the price of the shares has not yet been decided, and most buyers are anticipated to be local investors. The sale would be Toyota’s most recent attempt to sell off a portion of its cross-shareholdings as it increases the production of battery-electric cars. This very capital-intensive project needs both a revamp of the factory floor and investment for research and development.
The best-selling carmaker in the world, Toyota, said in July that it will sell a roughly 250 billion yen stake in the telecommunications firm KDDI Corp. (9433.T). This came after the business unveiled a comprehensive strategy to lower costs and increase the driving range of battery-electric vehicles.
For years, Japanese corporations have also been gradually disentangling their cross-shareholdings; this movement has gained new impetus due to the Tokyo Stock Exchange’s insistence that businesses enhance their capital allocation.
Before the announcement, Denso shares were already down over 4%. Following the Reuters article, losses worsened as the stock dropped as much as 6.8% for the day, finishing at a lower 4.9%. Toyota’s shares and the benchmark Nikkei 225 (.N225) ended the day mostly unchanged.
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