Toyota Group will sell the Denso stake as the component maker looks to buy back shares. According to the closing share price on Wednesday, Toyota Motor (7203.T) and two affiliates will sell 256,373,400 shares in Denso (6902.T), a manufacturer of car components. The transaction is expected to be valued at 589.1 billion yen, equivalent to $4 billion.
As part of its efforts to mitigate the transaction’s impact on the market, Denso announced in a separate announcement that it will repurchase around 125 million shares. According to Denso, the other vendors include the related businesses Toyota Industries (6201.T) and Aisin (7259.T).
On Wednesday, Denso shares finished the day with a gain of 0.9%, after dropping by 4.9% the previous day after Reuters was the first to publish the news.
As it cranks up the development and manufacture of entirely electric vehicles, Toyota, the carmaker that sells the most automobiles worldwide, aims to capitalize on affiliates’ shares to increase its profits.
Cross-shareholding is a practice that Japanese corporations have long engaged in. These companies have typically taken shares in their affiliates and commercial partners. However, to enhance their use of capital, they have been under pressure to unwind these holdings.
The choice made by Denso Corporation to sell its shareholding to Toyota Group while simultaneously beginning a share repurchase program is another example of a strategic action that was considered.
The changes in ownership and investment plans that have taken place affect Denso’s operations and have repercussions throughout the automotive sector. These kinds of movements put Denso in a position to negotiate difficulties and exploit opportunities as the landscape changes, confirming the company’s commitment to innovation and continuous success.
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