Amid the doubts, Toyota sold nearly 15 billion yuan of cross-shareholding shares

Observer.com

2024-07-01 17:04Observer.com official account

According to Reuters, Toyota Motor disclosed in a regulatory document submitted a few days ago that in the just-concluded fiscal year (April 2023-March 2024), Toyota sold a total of 325.9 billion yen (about 14.713 billion yuan) worth of cross-shareholding shares of listed companies. Toyota still holds 124 cross-holdings, down 17 from before the sale, according to the filing.

At the same time, Toyota reduced its stake in All Nippon Airways, Japan Airlines and East Japan Railway Company to zero. However, none of these companies holds a stake in Toyota.

Cross-shareholding refers to two companies holding each other's shares in order to deepen their ties and strategic partnerships. For example, in the famous Renault-Nissan alliance, Renault and Nissan hold 15% of each other's shares.

Toyota Motor is the world's largest automaker, and it has cross-shareholding relationships with many companies in the Japanese automotive industry chain, such as Mazda, Suzuki, and Denso. Through cross-shareholding, Toyota, as a downstream, can give back to the upstream in the form of purchasing parts and components of the shareholding company, so as to form a large-scale community of interests with the cross-shareholding company.

Therefore, the number and speed of Toyota's cross-shareholding sales have also been closely watched by the market.

Toyota Motor Credit: Reuters

It is worth mentioning that Toyota has sold about 125 million shares of Denso by the end of 2023, and its shareholding in the latter will be reduced from 24.2% to 20%, and the value of the shares sold is about 300 billion yen (about 13.5 billion yuan), causing a shock in Japan.

There is a view that Toyota's dismantling of traditional cross-shareholding companies is to raise funds to invest in electrification and intelligent emerging technologies. In addition to Toyota, Nissan Motor has previously sold a 41% stake in its parts company Kalsonic Kansei to US private equity firm KKR for 400 billion yen, and used the funds to support research and development of new technologies.

In addition, ahead of Toyota's shareholder meeting this year, some shareholders have questioned Toyota's long-term cross-shareholding practices.

Previously, Toyota disclosed in its annual report that in the last fiscal year, Toyota's chairman Akio Toyoda received a salary of 1.622 billion yen (about 73.2 million yuan), an increase of about 60% year-on-year, reaching the highest annual salary of executives in the history of Japanese car companies.

Although Toyota Motor Co., Ltd. set a record for operating profits of more than 5 trillion yen for the first time in Japan last fiscal year, Akio Toyoda's latest approval rating among shareholders was only 72%, a record low and down 13 percentage points from the previous year. In addition to the recent outbreak of fraudulent vehicle certifications, Glass Lewis, a U.S. consulting firm with one of the foreign shareholders, has recommended rejecting the reappointment of Akio Toyoda and vice chairman Shigeru Hayakawa, arguing that Akio Toyoda should be held accountable for the company's "lack of independence." Skeptics argue that it is cross-shareholding between companies such as Toyota that exacerbates the phenomenon.

Akio Toyoda Credit: Reuters

In the capital market, Toyota's share price has risen by a total of 13% since the beginning of the year, but it has continued to fall after the outbreak of model certification fraud. As of the close of the U.S. stock market on June 28, Toyota's share price rose 0.53% to close at $204.97.

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