Japanese Mega Banks Plan $8.5B Toyota Stake Sale: Report

Mitsubishi UFJ Financial Group Inc. MUFG and Sumitomo Mitsui Financial Group Inc. SMFG are reportedly set to divest approximately ¥1.32 trillion ($8.5 billion) worth of strategic shareholdings in Toyota Motor Corp. TM.

The major move indicates a strong commitment by Japan’s major corporations to dismantle their extensive network of cross-held shares. This strategic unwinding is designed to mitigate any adverse effects on Toyota’s share price, reported Bloomberg.

The banks will divest in phases, leveraging Toyota’s recent buyback initiative. On May 8, Toyota announced a ¥1 trillion buyback plan, equivalent to about 3% of its stock, marking a substantial increase from previous repurchases.

The Japanese government has long advocated for reducing cross shareholdings, which were established to solidify business alliances.

However, entities like these banks have been slow to act. This substantial divestment by Toyota’s major stakeholders could catalyze a wider movement toward loosening equity ties in Japan’s corporate sector.

The Mitsubishi stake is valued at approximately ¥700 billion, while Sumitomo Mitsui holds about ¥620 billion worth of Toyota stock, as per the report.

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These sales are planned to span several years, reducing or potentially eliminating their stakes in Toyota. Meanwhile, Mizuho Financial Group Inc. MFG does not hold a notable stake in Toyota. The decision follows a notable appreciation in Toyota’s stock price.

The report also mentioned that some insurers, including MS&AD Insurance Group Holdings Inc. MSADY, Tokio Marine Holdings Inc. TKOMY, and Sompo Holdings Inc. SMPNY, hold stakes in Toyota. The total would top ¥3 trillion if they joined the banks.

Toyota itself is also reducing its cross-shareholdings within its network. In November, the company announced it would lower its stake in electric parts manufacturer Denso Corp. DNZOY to 20% from 24%.

Previously, Toyota committed to selling part of its stake in KDDI Corp. KDDIY for ¥250 billion. These moves aim to reallocate funds towards Toyota’s electric vehicle initiatives and buyback programs.

Price Action: TM shares are trading lower by 1.36% at $207.18 at the last check Friday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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