Shares of Toyota Industries were set for their biggest daily jump on record on Monday after Japanese carmaker Toyota said it was considering a potential buyout of the key parts supplier, which has a market value of ¥4-trillion (R523.28bn).
Toyota Industries shares remained untraded with a glut of buy orders on Monday. The bid and ask indicated that their price was poised to hit the daily upper limit of ¥16,225 (R2,111), a 23% jump on Friday's closing price of ¥13,225 (R1,721). Reuters has calculated the market capitalisation based on the close.
Such a rise would mark the stock's biggest one-day jump in at least four decades, according to LSEG data going back to early 1984.
On Saturday, Toyota said in a filing with the Tokyo stock exchange it was exploring various possibilities, including a partial investment in Toyota Industries.
Bloomberg News reported on Friday that Toyota chairperson Akio Toyoda and his founding family have proposed acquiring Toyota Industries in a potential ¥6-trillion (R779.91bn) deal.
In a statement on Saturday, Toyota Industries confirmed it had received proposals about going private through a special purpose company but it denied receiving a buyout offer from the Toyota chairperson or the Toyota group.
The possible buyout comes as Japanese companies have faced increasing pressure in recent years to unwind their cross-shareholdings in affiliates and business partners, which in many cases have been held over the long term.
Toyota owned about 24% of Toyota Industries as of September last year, while Toyota Industries held just over 9% of the world's biggest carmaker and more than 5% of Denso, another key Toyota supplier.
In an April 23 report, analysts at Bernstein said Toyota Industries' potential sale of its stake in Toyota was a strong positive catalyst for its share price, adding privatisation of the supplier was a possible scenario.
Under that scenario, Toyota would repurchase its stake in Toyota Industries while simultaneously acquiring the company's high-growth materials handling equipment business at little to no cost, the report said. Toyota Industries makes forklifts through that division.
Toyota industries, formerly Toyoda Automatic Loom Works, was founded in 1926 by Sakichi Toyoda to manufacture automatic looms. An automotive division within the company was created and later spun off as Toyota Motor.
In addition to forklifts, Toyota Industries manufactures the RAV4 sport utility vehicle for Toyota. It also produces engines, air-conditioning compressors for cars and electronic parts such as batteries and converters.
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