Toyota Fudosan is set to launch a USD33 billion takeover bid via a stock company as the offeror in December this year to take Tokyo Stock Exchange-listed Japanese forklift maker Toyota Industries Corporation private and make it a wholly owned subsidiary.
Operating as Toyota Group companies, the real estate arm Toyota Fudosan has appointed Mori Hamada & Matsumoto as the offeror’s legal adviser, while Toyota Industries has hired Nishimura & Asahi as its legal counsel.
Nagoya-based LPC partner Hiroki Fujii, who is one of three partners leading Nishimura’s team representing Toyota Industries, told Asia Business Law Journal they advised the client on measures that should be taken to ensure the fairness of procedures in the transactions, and matters including the method and process of decision-making, among other issues.
Earlier this year, Toyota Industries established a special committee consisting of three external independent directors. The special committee hired Tokyo-based law firm Gaien Partners as its legal adviser. Based on advice from Gaien Partners and Nishimura & Asahi, the special committee has assessed the legitimacy of the transactions and the fairness of their conditions.
Fujii, who is advising Toyota Industries together with partners Yo Ota and Yamato Nozawa, said Toyota Fudosan and Toyota Industries had to eliminate the arbitrariness in the decision-making process and avoid conflicts of interest.
Currently, Toyota Industries is not a subsidiary of Toyota Fudosan, and the tender offer does not constitute a tender offer by a controlling shareholder. There is also no plan for all or some of the management team members of Toyota Industries to directly or indirectly make capital contributions to the tender offeror. The transactions, including the tender offer, do not constitute a management buyout.
The transaction will see Toyota Motor Corporation, AISIN, DENSO and Toyota Tsusho simultaneously selling their Toyota Industries shares and acquiring their own shares held by Toyota Industries, which dissolves the cross-shareholding between them. This deal comes against the backdrop of the Japanese stock exchange and the Financial Services Agency now mandating Japanese corporates to reduce cross-shareholdings, which have been seen as a practice for maintaining relationships with business parties, rather than for pure investment purposes.
But Fujii said considering that Toyota Fudosan directly held a 5.42% stake in Toyota Industries, there was a possibility the interests of Toyota Motor – a major and largest shareholder of Toyota Industries – and the interests of the minority shareholders of Toyota Industries would not necessarily align.
“(This is because) it is planned that Toyota Fudosan and Toyota Motor will (among other things) execute the master agreement and Toyota Motor will make the preferred shares contribution to the offeror’s parent company,” said Fujii.
In the master agreement, it had been decided that, among others, Toyota Motor would neither tender any of Toyota Industries’ shares held by Toyota Motor in the tender offer, nor engage in any act that competes, contradicts or conflicts with the tender offer, Toyota Industries in a 3 June announcement, expressing its support of the tender offer for its shares by Toyota Fudosan.
Toyota Industries was established in 1926 by Toyota Group founder Sakichi Toyoda and operates as one of Toyota Group’s core companies, engaging in the manufacture and sale of automobiles, industrial vehicles and textile machinery.
Toyota Fudosan, on the other hand, was founded in 1953 as a member of the Toyota Group and focuses on developing and managing office buildings in Nagoya, Tokyo and Osaka.
