In total, the sale would amount to about 10 percent of Denso, with about half expected to come from Toyota. Meanwhile, its subsidiaries Toyota Industries (which makes forklifts) and Aisin (which supplies engines, drivetrains and other components) will sell the remaining shares.
At the same time, Denso plans to buy back some of the shares sold as part of the move to prevent its share price from falling too low, Reuters reported. However, the company's shares have already fallen 4.9 percent following initial reports of the deal.
As of September, Toyota held a 24.2 percent stake in Denso. As a result, Toyota will remain the company's largest shareholder even after the deal is completed, selling about five percent of the supplier's shares.
If approved, this would be Japan's second-largest share offering this year (behind only a sale of shares in Japan Post Bank) and the most significant transaction in the auto industry in more than a decade.
As these actions have not been formally announced, Toyota has not yet publicly disclosed its rationale. Nonetheless, the company is ramping up production of electric vehicles, a capital-intensive endeavor due to the research and development and production retooling required by this advanced technology.
The automaker is working to deploy new gigapresses in its factories and develop longer-range EVs with exotic technology, such as solid-state batteries, to take on the likes of Tesla. At the same time, it plans to continue producing hybrid and hydrogen vehicles for the foreseeable future.
Source: Reuters