In a significant strategic move, Toyota Motor Corp. (NYSE:TM) has announced plans to repurchase ¥806.8 billion ($5.2 billion) of its shares from key Japanese banks and insurers. The move is part of a broader strategy to untangle its shareholdings with financial partners.

What Happened: The shares will be bought back from Mitsubishi UFJ Financial Group Inc. (NYSE:MUFG), Sumitomo Mitsui Financial Group Inc. (NYSE:SMFG), Tokio Marine Holdings Inc. (OTC:TKOMY), and MS&AD Insurance Group Holdings Inc. (OTC:MSADY) at ¥2,781 each, an 11% discount to their closing price on Tuesday, Bloomberg reported on Tuesday.

This move is part of a ¥1 trillion ($6.4 billion) repurchase plan announced by Toyota in May, aimed at satisfying the Japanese government's push for large corporations to unwind cross-held shareholdings. The deal could potentially trigger a broader wave of looser equity ties in Japan.

Why It Matters: This strategic move is a response to the Japanese government's push for corporations to dismantle their extensive network of cross-held shares. Toyota's share buyback initiative, announced in May, is a significant increase from previous repurchases.

Toyota's shares have climbed 26% this year, following a 43% rally in 2023. The banks and insurers plan to divest their Toyota shareholdings over a few years, significantly reducing their stakes or divesting them entirely.

Recently, Toyota has announced that its internal investigation into car model certification applications has not uncovered any further instances of misconduct, beyond those previously reported. This investigation was initiated in response to an industry-wide directive from the Japanese transport ministry, following a safety test scandal at Toyota's Daihatsu compact car unit.

Furthermore, Toyota's electric vehicle (EV) sales quadrupled in the second quarter, with the company selling almost 250,000 hybrid and electric models. This represents a year-over-year rise of 63%, representing almost 40% of the group's total volume. EVs and PHEVs are undoubtedly Toyota's fastest-growing segment.

Price Action: Toyota Motor stock closed at $200.14 on Monday, according to Benzinga Pro.

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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari