Accelerate the unbundling! Toyota (TM.US) plans to sell $19 billion strategic stake, helping to drive governance reform in Japan.

According to reports, Toyota Motor Corp. Sponsored ADR (TM.US) is planning to lift the ban on about 3 trillion yen (around $19 billion) of strategic holdings held by banks and other financial institutions. This move is expected to be a significant driver for corporate reform efforts in Japan. If implemented, it would signify Toyota's acceleration of its efforts to remove cross-shareholdings. This process began in 2024, aiming to respond to the Japanese government's push for large companies to streamline their complex shareholding networks in order to increase investor returns and encourage fair competition. Unnamed sources suggest that the scale of this sale could be even larger based on shareholder willingness to sell. Toyota aims to complete the sale as early as this year, but the timing and scale may change, or the plan could be completely abandoned. A spokesperson for Toyota Motor Corp. Sponsored ADR declined to comment on the report. Following the news, the company's stock price briefly rose, but then partially retreated. As of the time of writing, the stock had risen by 0.17% to $242.13. Senior automotive analyst Tatsuo Yoshida said, "The key issue is whether Toyota will retain the repurchased shares as treasury stocks or cancel them to actually reduce the number of outstanding shares." He also emphasized the importance of how Toyota will utilize these repurchased shares. Earlier reports indicated that Mitsubishi UFJ Financial Group, Inc. Sponsored ADR and Sumitomo Mitsui Financial Group plan to reduce their total 1.32 trillion yen strategic holdings in Toyota. Kazuhiro Sasaki, head of research at Phillip Securities Japan, believes that from a corporate governance perspective, this news is positive. He points out that financial institutions as cross-shareholders are not good governance practices, and Toyota's plan aligns well with Japan's plan to revise the Corporate Governance Code this year. However, overall reform efforts in the Japanese corporate sector have been slow. Toyota's own efforts to privatize a key subsidiary have attracted attention. The group's attempt to acquire Toyota Industries Corporation has faced strong criticism from activist investor Elliott Investment Management, which is calling on investors to oppose the acquisition offer. This privatization effort is led by Toyota Motor Corp. Sponsored ADR Chairman Takeshi Uchiyamada, with the tender offer period set to end on Monday. Earlier this month, Toyota Industries Corporation stated that there was still about a 9% gap in obtaining the two-thirds majority stake required for the initiation of a squeeze-out acquisition.