• Daihatsu has dominant position in Indonesia, Malaysia
  • Toyota, Suzuki deny Nikkei report of talks for alliance

Toyota Motor Corp. is considering a buyout offer for its Daihatsu Motor Co. unit, which would give the world’s biggest automaker full control over a company that excels in minicars and emerging markets.

Toyota holds a 51 percent stake in Daihatsu and is constantly considering a number of possibilities including making it a fully owned subsidiary, the company said in a statement. Daihatsu said it’s cooperating with Toyota and that the buyout is an option. Shares of Daihatsu rose 16 percent, their biggest gain since November 1999, at the close in Tokyo.

At Daihatsu’s current market value, the portion of the company Toyota doesn’t already own is worth about 360.8 billion yen ($3 billion). The deal would give Toyota full say over a company that competes with Suzuki Motor Corp. in Japan’s minicar segment, which has expanded even as the broader Japanese auto market has shrunk. Daihatsu also has a commanding position in Southeast Asian markets.

“Toyota owning and having full control of Daihatsu is a natural, long-term extension of the business,” Matt Stover, a Boston-based analyst at Susquehanna International Group, said by phone. “There are certain things that you can’t get at when it’s an independent company versus when it’s something that you totally own, there are some duplicate expenses you can get rid of and you have a lot more latitude to pursue your strategy.”

The Nikkei reported the Daihatsu plan earlier Wednesday. The newspaper also separately reported that Toyota had begun talks with Suzuki to form an alliance and better compete in emerging markets including India, without citing anyone. Toyota and Suzuki denied the Nikkei report in filings with the Tokyo exchange.

Daihatsu has been Japan’s top seller of mini vehicles for the last nine fiscal years, controlling about 31 percent of the market in the first half of the annual period ending in March.

Toyota first tied up with Daihatsu in 1967 and has owned its majority stake since 1998. Daihatsu started making Toyota-branded minicars in 2011 and also builds vehicles for its parent in Indonesia. The company also was the top-selling automaker in Malaysia for nine straight years through 2014.

Daihatsu traces its beginnings to March 1907, when two academics and a group of businessmen set up a company in Osaka, Japan’s second-largest city, to produce internal combustion engines. The company changed its name to Daihatsu Motor in December 1951.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE