TOKYO, Japan: Toyota has announced that it will take one of its key group suppliers, Toyota Industries, private in a deal worth UD$26 billion.

This move is led by an unlisted real estate company called Toyota Fudosan, which Toyota Chairman Akio Toyoda chairs. The deal marked a significant change for Japan's biggest company and highlighted the continued power of the founding Toyoda family.

Toyota Fudosan will offer 3.7 trillion yen (about $26 billion) to buy all shares of Toyota Industries, a company that makes forklifts, engines, batteries, and converters. The offer price is 16,300 yen per share, which is lower than the recent market price of 18,400 yen. This lower price surprised many, as earlier media reports had expected a much higher price—around $42 billion.

Toyota also said it will buy back its shares from Toyota Industries as part of the deal.

In recent years, Japanese companies have faced growing pressure from regulators and investors to reduce cross-shareholdings between related businesses. This has led to more management buyouts and acquisitions, with the goal of improving corporate governance and shareholder returns.

Toyota had earlier said it was thinking about joining a possible buyout of Toyota Industries. Experts say this move will help improve how Toyota manages its group companies.

As of September last year, Toyota owned about 24 percent of Toyota Industries. In return, Toyota Industries held about 9 percent of Toyota and over 5 percent of Denso, another important company in the Toyota group.

Toyota Industries has deep historical roots. Sakichi Toyoda founded it in 1926 to make automatic looms. Later, its automotive division became what we now know as Toyota Motor.