Quick overview

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Toyota Industries fell by over 12% on Wednesday following a $33 billion take-private offer for the forklift operator from parent company Toyota Motor that fell short of investor expectations.

The world’s top-selling automaker will take its supplier private, offering Toyota Industries 16,300 yen per share through a complicated 4.7 trillion yen ($33 billion) deal.

That price was significantly lower than Tuesday’s closing price of 18,400 yen before the deal. In Tokyo morning trading, Toyota Industries’ stock was down 12%

The tender offer would be approximately $42 billion, a significant premium over the offer’s actual value. Toyota Industries stated on Tuesday that going private will enable it to adopt a longer-term business strategy.  Japanese conglomerates are facing mounting pressure to unwind their stakes in one another as the government pushes for better governance,

According to the companies, a new holding company will be established for the transaction.  Japanese companies have seen a rise in management buyouts and acquisitions because of investors’ and market regulators’ increased scrutiny of their cross-shareholdings in affiliates and business partners.

The expectation to propel corporate governance will lead to higher returns for shareholders.