Ten Japanese financial institutions and insurance firms are planning to sell Honda Motor Co. shares worth $3.3 billion (¥535 billion) in a move to divest cross-shareholding.
The institutions that are selling the stocks in the second biggest Japanese automaker include Tokio Marine & Nichido Fire Insurance, Sompo Japan Insurance, Mitsui Sumitomo Insurance, Mitsubishi UFJ Trust and Banking Corporation, MUFG Bank, Saitama Resona Bank, and Mizuho Bank, a regulatory filing showed on Thursday.
The move is for unwinding cross-shareholdings as part of Japan’s move to enhance corporate governance.
“From the perspective of enhancing corporate governance, the movement towards unwinding of cross-shareholdings and relation-oriented shareholdings has been progressing in the Japanese market,” the disclosure said.
Cross-shareholding, or two companies owning shares in each other, is a common practice in Japan’s corporate sector and several companies are divesting such holdings recently.
It is also aimed at expanding and diversifying the company’s shareholder base, which will help to further enhance the management discipline.
300 million shares The secondary share offering from ten Japanese financial institutions would be up to 300 million shares, including over-allotment, but the price is not yet decided, the filing showed.
Through the secondary offering, Honda Motor is aiming for further enhancement of its corporate value through establishing a strong corporate brand and business foundation by collaborating
Honda’s shares closed at $11.12 Thursday, registering a 3% rise on the Tokyo bourse.
In May, Honda Motor said its sales revenue for the fiscal year ending March 2024 swelled to $131.2 billion, registering a 20.8% rise from the year-ago period, supported by higher demand in the automobile business and favorable foreign currency effects.
The automaker’s operating profit also shot up by 77% year-on-year to $8.9 billion for the fiscal year.
Honda Motor said in March that it plans to build a $11 billion electric vehicle (EV) value chain facility in Canada to strengthen supply as it prepares for an upcoming increase in EV demand.
Honda aims at a 40% share in EVs and fuel cell electric vehicles (FCEVs) in its global sales by 2030 and 100% of its worldwide sales by 2040.
