Elliott Investment Management, which holds a 5.2% stake in Toyota Motor Corporation (TM), has publicly reiterated its opposition to TM’s revised proposal to acquire Toyota Industries. In a letter to the TM board, Elliott emphasized that the stand-alone plan it previously outlined could unlock value at a valuation multiple approximately 30% higher than the current bid. Elliott pointed to Toyota Industries’ recent free cash flow of ¥210 billion in the last fiscal year and argued that a spin-off or standalone restructuring would attract strategic and financial buyers willing to pay at least 12 times EBIT, compared with the 9.2 times multiple implied under TM’s ¥4.5 trillion bid.

TM’s board approved a ¥4.5 trillion (roughly $40 billion) bid to integrate Toyota Industries’ core businesses—forklifts, thermal engine components and advanced manufacturing systems—into its own operations. Management projects that the combined entity could realize annual synergies of ¥70 billion by fiscal 2028 through supply-chain optimization and shared R&D. TM cited recent growth in its industrial division, which saw operating profit rise 18% year-over-year to ¥140 billion, as evidence that deeper vertical integration would strengthen earnings resilience amid global supply-chain disruptions.

Analysts note that Japan’s government has earmarked ¥20 trillion over the next five years for defense and infrastructure upgrades, a policy shift that is expected to boost domestic demand for heavy machinery and engines. Toyota Industries’ forklift segment reported an order backlog of 85,000 units as of December and its thermal engine division secured ¥60 billion in new contracts with defense suppliers. TM strategists believe that by bringing these businesses in-house, the company can capture more of the downstream aftermarket services, which currently account for 25% of Toyota Industries’ revenue, enhancing long-term margins despite limited near-term multiple expansion.