Toyota Motor (TM.US) may have increased its buyout offer for its subsidiary Toyota Industries by 15%, but this failed to satisfy activist investor Elliott.

Elliott stated on Thursday that the acquisition plan "severely" undervalues the forklift manufacturer.

Elliott Investment Management disclosed its stake in Toyota Industries last November and increased its shareholding to 5% last month.

The firm stated it would not sell its shares at the improved offer price and would encourage other shareholders to follow suit.

Toyota Motor, its Chairman Akio Toyoda, and the group's real estate company Toyota Fudosan raised the buyout offer for Toyota Industries to 18,800 yen per share on Wednesday, valuing the company at approximately 5.6 trillion yen (about $35 billion).

Elliott said in a statement, "Toyota Industries owns high-quality, market-leading businesses and valuable financial assets, which, according to Elliott's empirical research, have a total value exceeding 25,000 yen per share."

Prior to Elliott's statement, Toyota Industries' share price closed at 19,150 yen per share, up 6.2% for the day and 1.9% above the new offer price of 18,800 yen.

The stock price had once hit a record high of 19,255 yen.

Toyota's initial offer price was 16,300 yen per share, an offer that would strengthen the Toyoda family's control over the Toyota Group.

This offer was widely criticized by global investors for its lack of transparency in valuation.

Since Toyota announced the acquisition plan, the value of Toyota Industries' holdings in other Toyota Group companies has risen due to increases in the group's overall share price.

Toyota's Chief Financial Officer and Toyota Fudosan director Kenta Kon said on Wednesday that the higher offer price reflects changes in the economic environment and Toyota Industries' business since June.

However, this has also prompted some analysts to question the logic behind the latest offer.

Stephen Codrington, founder of independent research firm Codrington Japan, stated, "If they believe the 18,800 yen price reflects not just higher market prices and lower taxes, it means they have lowered their valuation of Toyota Industries' core business."

He added that investors might wait until later in the tender offer period to see if Toyota will improve the terms again.

The tender offer began on Thursday and will last until February 12th.