Summary The shares of the company rose 1.09 percent to 5,621 yen ahead of the announcement.
TOKYO (AFP) - Toyota is to buy back as much as 1.89 percent of its shares for 360 billion yen ($3.5 billion), raiding a growing corporate cash chest for the first time in five years, the Japanese carmaker said Wednesday.
The world s largest automaker said it will purchase up to 60 million shares over a 10-month period following the next shareholders meeting in June.
It will cancel half of them, to avoid sparking fears of dilution in future share sales, the company said in a statement.
The other shares will be handed over to a trust that will manage them on behalf of a new foundation to "support efforts to address mobility challenges around the world" such as traffic jams and better use of energy, it said.
The last Toyota share buy-back was in February 2009, a company spokeswoman said, adding it had repurchased 930,000 shares for 2.8 billion yen at the time.
Observers said it was a way for Toyota to invest its large cash pile into its own shares and to increase value.
"The company has improved its business performance greatly thanks to a weaker yen and now has abundant cash," said auto analyst Tatsuya Mizuno.
"By using the cash to buy back its own shares Toyota could show the management s confidence to investors that they are worth pouring cash into."
Toyota shares rose 1.09 percent to 5,621 yen ahead of the announcement on Wednesday.
