Toyota selling part of Denso stake to raise cash to develop electric vehicles
TOKYO — Toyota announced on Wednesday its decision to sell a portion of its stake in Denso, a components maker, as part of its strategy to accumulate funds for the advancement of electric vehicles and other innovative ventures. The divestiture, estimated to yield around 290 billion yen ($2 billion) based on current share values, involves Toyota Motor Corp. selling over 124 million shares, consequently reducing its ownership in Denso Corp. from 24.2% to 20%, though it will retain its position as the primary stakeholder.
Masahiro Yamamoto, an executive within Toyota's accounting group, emphasized the intention to transform assets into active contributors to the company's growth: "We don't want our assets to remain static; we aim to leverage them for the evolution of our enterprise."
Closing at 2,298 yen ($16) on Wednesday, Denso's shares were mentioned in the announcement.
The raised capital will not only support the development of smart-driving technologies but also fund various ongoing industry initiatives.
While no specific date was provided for the sale, Yamamoto indicated that it is anticipated to occur shortly.
Amid escalating concerns about climate change, major global automakers are intensifying efforts to bolster their electric vehicle and eco-friendly car portfolios, necessitating substantial investments across the industry.
In addition to Toyota's actions, officials confirmed that Toyota affiliates, Toyota Industries and Aisin, are also divesting a portion of their Denso shares.
The practice of cross-shareholdings, prevalent among Japanese companies, involves holding stakes in other group entities—a strategy recently addressed by Yamamoto. He refuted claims that the move aimed to diminish such cross-holdings. While some critique this practice for its potential impact on transparency, proponents argue it contributes to stability.
Acknowledging their lag in the industry's electric vehicle transition, Toyota officials have fervently pursued strategies to catch up.
Renowned for producing models like the Camry sedan, Lexus luxury vehicles, and the fuel-efficient Prius hybrid, Toyota leads globally in hybrid technology, seamlessly alternating between gas engines and electric motors. The company also boasts a robust lineup of hydrogen-powered fuel cells, contributing to zero-emission solutions.
Earlier in July, Toyota divested a portion of its stake in telecoms firm KDDI Corp., amassing approximately 250 billion yen ($1.7 billion). While hinting at potential similar initiatives, Toyota officials refrained from disclosing specific plans.