Toyota Motor Corp has announced Japan's biggest ever share buyback, sending its stock price surging after weeks of decline and easing worries that a flood of Toyota stock would swamp the Tokyo market.
The world's third largest automaker said it planned to buy back and retire up to 75 million shares, two percent of its outstanding stock, by spending up to 250 billion yen ($2.1 billion) from its huge cash reserves of 2.38 trillion yen.
Rumours had surfaced in Tokyo's financial markets recently that Toyota might announce a plan by banks to sell 300-400 billion yen ($2.5-3.4 billion) worth of its shares in a secondary offering in coming weeks.
That rumour, sparked by speculation that banks needed to trim their holdings in other companies, or in so-called cross-held shares, drove Toyota's stock last Thursday to its lowest level since September 1999 at 3,370 yen.
The new purchases, to be made by end-March, aim to help ease fears of oversupply in the stock market following recent moves to dissolve cross share-holdings, a Toyota spokesman said.
Shares in Japan's largest automaker soared on Tuesday on reports overnight that the expected sale of Toyota shares by banks might be shelved. They gained further after the massive share buyback announcement came just before the market closed.
Toyota's stock price ended at 3,970 yen, a six-week high, up 450 yen or 12.78 percent from day before.
Reuters