Elliott's $3B Toyota Bet Faces Crucial Takeover Deadline

Elliott Investment Management, an $80 billion firm, is making a significant stand against the proposed privatization of Toyota Industries Corp. The US hedge fund has amassed a stake exceeding 7% in the ¥6.4 trillion company, valuing it at nearly $3 billion and positioning it as its third-largest global holding. Elliott contends that the current privatization bid, led by magnate Akio Toyoda, significantly undervalues the sprawling manufacturer.

The crucial tender offer period is set to conclude on Thursday, marking a pivotal moment for Elliott's activist strategy in Japan. This high-profile confrontation is viewed as a significant test for Japan's evolving corporate governance, where investor activism, while growing, is still finding its footing. The outcome could set a precedent for how effectively foreign activist funds can influence major Japanese corporations.

Elliott's presence in Japan has grown, particularly after hiring Aaron Tai in 2023 to lead its investment activities in the country. Tai, who has a track record of successfully challenging corporate actions in Japan, such as his role in thwarting a bid for Toa Oil Co. and leading the takeover of Uniden Holdings Corp., brings valuable experience. The firm views Tai as an essential 'agent of change' in the Japanese market.

Toyota Industries and the bidding entity, Toyota Fudosan Co., maintain that the offer price accurately reflects the business's intrinsic value. However, Elliott has repeatedly stated its belief that Toyota Industries is worth at least ¥26,000 per share, and potentially up to ¥40,000 if its business strategy is enhanced. The market's reaction, with shares recently closing above the offer price, indicates ongoing investor interest and potential dissent.