Japanese automaker Toyota is planning to sell around $19 billion in strategic shares to major financial institutions such as banks and insurance firms.
If the move is implemented, it would be a significant turning point in Japan's corporate governance landscape.
The sale is expected to be worth around ¥3 trillion ($19 billion), but the actual figure could rise depending on shareholders' willingness to sell.
Toyota is also targeting the sale to take place as early as this year, but the timing and size of the transaction could still change or be canceled.
Toyota chose not to make any official statement, according to Reuters sources.
Toyota shares continued to rise, rising about 2% in early afternoon trading, outperforming the broader market.
At the same time, Toyota reportedly intends to buy back shares before selling them, but secondary sales to other investors are also being considered.
This situation suggests that the world's largest automaker is serious about restructuring its shareholding.
The move reflects ongoing pressure from regulators and the Tokyo Stock Exchange for Japanese companies to reduce cross-shareholdings.
Cross-shareholdings by other companies have often been criticized as undermining management accountability to shareholders.
While cross-shareholdings have long been the norm in Japan, they are considered outdated and less accepted in Western markets.
Toyota itself has been criticized for having weak governance systems and has been under pressure from investors to improve capital efficiency.
News sources said Toyota wanted to demonstrate its seriousness in corporate governance reforms with the major move.
Ironically, while Toyota is looking to clean up its strategic shareholdings, the carmaker is still embroiled in a controversial tender for Toyota Industries, its forklift maker.
Activist investor Elliott opposed the offer on the grounds that the price was too high and there was a lack of transparency. However, the tender offer had to be extended to March 2 due to lack of shareholder support.
