IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/toyota-industries-corp" target="_blank" data-smartkarma-citation="entities:4500:1" rel="noopener">Toyota Industries (6201 JP)</a> shares were set to hit the daily upper limit of JPY16,225 due to press reports of a privatisation bid valuing it at JPY6 trillion. </li>
<li>Toyota Industries confirmed receiving a going-private proposal from a special purpose company, while <a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" data-smartkarma-citation="entities:73:1" rel="noopener">Toyota Motor (7203 JP)</a> said it is considering all possibilities, including a partial investment. </li>
<li>There are still several unknowns, including the price, the identity of the offeror, potential irrevocable commitments, the financing structure, and the timeline. </li>
</ul>



Toyota Industries (6201 JP) shares were set to hit the daily upper limit of JPY16,225 due to press reports of a privatisation bid valuing it at JPY6 trillion. 
Toyota Industries confirmed receiving a going-private proposal from a special purpose company, while Toyota Motor (7203 JP) said it is considering all possibilities, including a partial investment. 
There are still several unknowns, including the price, the identity of the offeror, potential irrevocable commitments, the financing structure, and the timeline. 


Toyota Industries (6201 JP): A Rumoured Privatisation with Several Unknowns

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>On Friday after the close, media reports surfaced that <a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" data-smartkarma-citation="entities:73:1" rel="noopener">Toyota Motor (7203 JP)</a> Group chairman and founding family member had put forth a take-private proposal to <a href="https://www.smartkarma.com/entities/toyota-industries-corp" target="_blank" data-smartkarma-citation="entities:4500:1" rel="noopener">Toyota Industries (6201 JP)</a>. </li>
<li>The number quoted was ¥6trln market cap (most) or EV (<a href="https://www.ft.com/content/f4a8eeda-2e2e-4947-aac7-d5d71f336432" target="_blank" rel="noopener">FT</a>), financed by personal funds, 3 megabanks, and reportedly some group companies. </li>
<li>¥6trln market cap would be +50%. ¥6trln EV +16%. Simultaneously shocking but somehow not surprising. Opportunistic, and surprisingly elegant as a family/group/cultural solution. More below.</li>
</ul>


On Friday after the close, media reports surfaced that Toyota Motor (7203 JP) Group chairman and founding family member had put forth a take-private proposal to Toyota Industries (6201 JP). 
The number quoted was ¥6trln market cap (most) or EV (FT), financed by personal funds, 3 megabanks, and reportedly some group companies. 
¥6trln market cap would be +50%. ¥6trln EV +16%. Simultaneously shocking but somehow not surprising. Opportunistic, and surprisingly elegant as a family/group/cultural solution. More below.


Toyota Industries (6201) - SURPRISE! It's a TOYODA Takeover Proposal (Good Governance May Not Win)

Quantitative Researcher, MRM Research

Nico Rosti

Quantitative Researcher

MRM Research

Quantitative Research

Equity Derivatives

<ul>
<li>
<a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" data-smartkarma-citation="entities:73:1" rel="noopener">Toyota Motor (7203 JP)</a> said in a Tokyo stock exchange filing on Saturday that it is exploring the possibility of investing in a potential buyout of key supplier Toyota Industries.</li>
<li>Bloomberg reported Friday that <a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" data-smartkarma-citation="entities:73:1" rel="noopener">Toyota Motor (7203 JP)</a>  Chairman Akio Toyoda and his family proposed acquiring <a href="https://www.smartkarma.com/entities/toyota-industries-corp" target="_blank" data-smartkarma-citation="entities:4500:1" rel="noopener">Toyota Industries (6201 JP)</a>  in a possible 6 trillion yen ($42 billion) transaction.</li>
<li>The stocks of both companies were rising on Monday, this insight focus on tactical positioning on Toyota Motor:the stock appears very OVERBOUGHT according to our models.</li>
</ul>



Toyota Motor (7203 JP) said in a Tokyo stock exchange filing on Saturday that it is exploring the possibility of investing in a potential buyout of key supplier Toyota Industries.
Bloomberg reported Friday that Toyota Motor (7203 JP)  Chairman Akio Toyoda and his family proposed acquiring Toyota Industries (6201 JP)  in a possible 6 trillion yen ($42 billion) transaction.
The stocks of both companies were rising on Monday, this insight focus on tactical positioning on Toyota Motor:the stock appears very OVERBOUGHT according to our models.


Toyota (7203 JP) Tactical Outlook Following Toyota Industries (6201 JP) Privatization Rumors

<ul>
<li>Last September in the release of its new Mid-Term Management Plan, Toyota Group member <a href="https://www.smartkarma.com/entities/aisin-corp" target="_blank" data-smartkarma-citation="entities:11809:1" rel="noopener">Aisin (7259 JP)</a> announced a plan to cut cross-holdings to zero. <a href="https://www.smartkarma.com/entities/jtekt-corp" target="_blank" data-smartkarma-citation="entities:12197:1" rel="noopener">JTEKT Corp (6473 JP)</a> followed suit.</li>
<li>It started with a selldown of <a href="https://www.smartkarma.com/entities/denso-corp" target="_blank" data-smartkarma-citation="entities:18703:1" rel="noopener">Denso Corp (6902 JP)</a>, then <a href="https://www.smartkarma.com/entities/toyota-industries-corp" target="_blank" data-smartkarma-citation="entities:4500:1" rel="noopener">Toyota Industries (6201 JP)</a>, now <a href="https://www.smartkarma.com/insights/big-aisin-7259-offering-sets-stage-for-first-toyota-group-full-unwind" target="_blank" rel="noopener">Aisin</a>. Last FY, Toyota Group cos reduced crossholdings by ¥870bn. This year will be more.</li>
<li>Attached below is a general breakdown of Toyota Group cross-holdings, discussion of cross-holding policies, and analysis of what is next, and what is not.</li>
</ul>


Last September in the release of its new Mid-Term Management Plan, Toyota Group member Aisin (7259 JP) announced a plan to cut cross-holdings to zero. JTEKT Corp (6473 JP) followed suit.
It started with a selldown of Denso Corp (6902 JP), then Toyota Industries (6201 JP), now Aisin. Last FY, Toyota Group cos reduced crossholdings by ¥870bn. This year will be more.
Attached below is a general breakdown of Toyota Group cross-holdings, discussion of cross-holding policies, and analysis of what is next, and what is not.


Toyota Group Cross-Holding Structure Primer - Holdings, Unwind Progress, Buyback Policies, Etc

<ul>
<li>We knew this was coming. We did not know HOW it was coming. The news today has to be seen as a bit of a disappointment.</li>
<li>Why is it a disappointment? <a href="https://www.smartkarma.com/entities/toyota-industries-corp" target="_blank" data-smartkarma-citation="entities:4500:1" rel="noopener">Toyota Industries (6201 JP)</a> is not buying back a big chunk, and there is no offering to oblige new investors to take a look.</li>
<li>This is long, slow, leakage on a company which is not overwhelmingly cheap, where it requires good governance to get out well, and even then...</li>
</ul>


We knew this was coming. We did not know HOW it was coming. The news today has to be seen as a bit of a disappointment.
Why is it a disappointment? Toyota Industries (6201 JP) is not buying back a big chunk, and there is no offering to oblige new investors to take a look.
This is long, slow, leakage on a company which is not overwhelmingly cheap, where it requires good governance to get out well, and even then...


Denso's Big Multi-Year Toyota Industries (6201) Selldown

Japan

TOYOTA INDUSTRIES CORPORATION, a member of the Toyota Motor Group, assembles motor vehicles and manufactures automotive parts such as engines and air conditioner compressors.  The Company also produces industrial equipment and textile machinery as well as electronic devices such as computer modems and power inverters.

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Toyota Industries (6201 JP)