TOKYO, Japan: Toyota Motor is weighing a potential investment in a primary buyout of one of its key suppliers, Toyota Industries, the company confirmed in a Tokyo stock exchange filing.

The automaker said it is "currently exploring various possibilities, including partial investment," following media reports that suggested a buyout could cost around US$42 billion. Bloomberg News had reported that Toyota Chairman Akio Toyoda and his founding family were proposing a 6 trillion yen ($42 billion) deal to acquire Toyota Industries.

Toyota Industries, valued at 4 trillion yen, issued a statement confirming it had received proposals regarding going private via a special purpose company but denied any direct buyout offer from Akio Toyoda or the Toyota group.

Two sources familiar with the situation, speaking on condition of anonymity, said Toyota Industries is considering tapping Toyota, its group companies, and major banks for funding. They clarified that Toyoda or the Toyota group had not initiated the proposal.

The sources also said that taking Toyota Industries private could improve corporate governance across the Toyota group by unwinding cross-shareholdings. However, both companies stressed that no decisions have been made yet.

As of September last year, Toyota owned 24 percent of Toyota Industries, which in turn held 9.07 percent of Toyota shares and 5.41 percent of Denso, another critical Toyota supplier.

Facing increasing shareholder pressure, Toyota Industries has already sold some of its cross-shareholdings, including its stake in Aisin, a key group supplier. Reducing cross-shareholdings has become a broader priority in Japan, where regulators and shareholders have criticized the practice for insulating management from shareholder accountability.

One source noted that going private would allow Toyota Industries to focus more freely on long-term growth strategies rather than short-term shareholder returns.

Toyota Industries, founded in 1926 by Sakichi Toyoda as Toyoda Automatic Loom Works, played a historic role in the company's evolution. It later spun off its automotive division, now known as Toyota Motor. Today, Toyota Industries manufactures forklifts, produces the RAV4 SUV for Toyota, and supplies engines.