Toyota and two of its affiliates are selling at least an 8% stake in automotive supplier Denso in what will be the largest share sale of its kind in the global auto industry in more than a decade. The carmaker will also sell its entire stake in Japanese speed reducer manufacturer Harmonic Drive Systems.
Denso is an important part of the Toyota group and the world’s second-largest maker of automotive components. It will buy back some of its shares in the open market after Toyota, Toyota Industries, and Aisin sell 256 million shares in the supplier. These shares were worth 589.1 billion yen ($4 billion) as of last week and represent an 8% stake in the company.
Despite the sale, Toyota will remain Denso’s largest shareholder with its stake reducing from around 24% to 20%. Similarly, the stake held by Toyota Industries will decrease from just over 10% to around 6%, Reuters reports, while Aisin’s holdings will be reduced completely.
“We know it’s going to free up some of the capital being locked within the Toyota balance sheet,” the head of mobility research at Macquarie, James Hong said. “What’s important is how they’re going to utilize this freed-up capital going forward.”
Just a few days after Toyota revealed it would be reducing its stake in Denso, it added that it would sell its entire stake in Harmonic Drive Systems in the open market overseas. The automotive juggernaut says it will sell 4,379,400 shares of Harmonic Drive Systems at an undecided sale profile. This stake was worth 18.1 billion yen ($123 million) as of this week.
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Harmonic Drive Systems will buy back up to 700,000 of its shares, Reuters reports.
Toyota has been on quite the selling spree in recent months. In late July, it announced it was selling a stake in telecoms company KDDI Corp worth approximately 250 billion yen ($1.8 billion).
