Toyota Motor Corporation (TM) shares climbed Thursday as a high-stakes fight over a contested tender offer took center stage. Elliott Investment Management isn't holding back, calling Toyota's revised buyout price for a major affiliate way too low and urging minority investors to walk away from the deal.
Here's what's happening: Toyota announced late Wednesday it had sweetened its offer to take Toyota Industries Corporation private, raising the price to 18,800 yen (about $118.11) per share from the original 16,300 yen floated last June, according to CNBC. Sounds generous, right? Elliott doesn't think so.
The Valuation Fight
Elliott Investment Management and its UK arm have come out swinging against the updated terms. The activist firm argues that Toyota Industries is worth far more than Toyota is offering to pay. Back in November, Elliott blasted the proposal, saying it "very significantly undervalues Toyota Industries and reflects a process that has lacked transparency and has fallen short of proper governance practices."
The math, according to Elliott, tells a different story than Toyota's offer suggests. The firm pegs the intrinsic value at north of 25,000 yen per share, a figure that reflects massive gains in the company's underlying assets. Toyota Industries holds valuable operating businesses and significant financial stakes in Toyota Motor and other Toyota Group companies. Those holdings have surged roughly 40% in value, Elliott notes, which should translate into a much higher price for shareholders.
Elliott isn't just complaining from the sidelines. The firm has made it clear it won't tender its own shares under the current structure and is actively encouraging other minority shareholders to reject the deal as it stands. The message: don't sell yourselves short.
Meanwhile, Toyota Motor (TM) stock has been on a tear, up over 26% in the past year. Investors looking for exposure can also check out Toyota Motor Corporation ADRhedged (TMH).
TM Price Action: Toyota Motor shares rose 2.73% to $234.09 on Thursday, hitting a fresh 52-week high.
