Shares of forklift manufacturer Toyota Industries surged to an all-time high on Thursday, a day after Toyota Motor increased the price of the tender offer to acquire the carmaker by more than 15 percent to over $35 billion.
Toyota Industries’ shares surged nearly 6 percent to 19,080 yen, which ranks higher than the offer price, which was revised to showcase to investors that they may get a better deal. Toyota Motor, the largest carmaker in the world by sales, was up more than 2 percent.
Toyota Motor announced late Wednesday that it had increased the bid to buy out the group firm to 18,800 yen ($118.11) per share, compared to 16,300 yen apiece it stated on June last year, pushing the plans to take the company private.
However, Toyota Motor had attempted to purchase the biggest corporate group in Japan last year at 4.7 trillion yen. The agreement included 1 billion yen from chair Akio Toyoda, and Toyota Motor’s investment of about 700 billion yen in non-voting preferred shares.
The Toyota industries reported in December that they had requested a higher price, claiming that the chances of the deal being successful were low. Global Equity Research Analyst on SmartKarma, Arun George, said, “While the revised offer represents an all-time high, it remains arguably light.”
He stated that it is lower than halfway between the low and high end of the valuation range established by the independent advisor, implying that the company can be underpriced.
However, Toyota Motor is a company that manufactures various products, such as forklifts, engines, and electronic parts, and stamping under Toyota Industries, which owns it.
An independent analyst, Travis Lundy, added that “I expect there to be some interesting fireworks on this deal. It is the biggest mis-priced takeover in Japan for quite a while. To be clear, I expect activist action.” He anticipates that activists will demand a higher price or attempt to block the deal.
According to its recent sales and production announcement, the total world production of Toyota Motor dropped by 5.5 percent to 821,723 units in November, the first negative year to year alteration in six months.
International sales also declined 2.2 percent year-on-year, and the company reported that its sales in China declined following the reduction in purchase subsidies in some regions in the country.
The automaker noted a significant blow due to U.S. tariffs, estimating a 1.45 trillion-yen (over $9 billion) effect on its financial year ending in March.
Toyota Motor said in November that it would invest $912 million in the U.S. manufacturing sites in five Southern states, as part of a larger strategy to invest up to $10 billion in the U.S. by 2030.
