http://www.businessweek.com/news/2011-09-28/japan-s-ruling-party-proposes-se
lling-stake-in-japan-tobacco.html
Japan’s Ruling Party Proposes Selling Stake in Japan Tobacco
September 28, 2011, 4:26 AM EDT
Sept. 28 (Bloomberg) — Japan’s ruling party proposed selling the
government’s majority stake in Japan Tobacco Inc., the world’s third-biggest
publicly traded cigarette maker, to help fund rebuilding after the March 11
earthquake.
Japan Tobacco fell 1.8 percent, the most since Sept. 5, to 356,500 yen at
the 3 p.m. close in Tokyo. The shares earlier today gained as much as 9.2
percent. The broader Topix index rose 0.7 percent.
The government may raise 1.8 trillion yen ($24 billion) by selling its 50.01
percent stake in Japan Tobacco at the stock’s current price. A sale may help
Japan Tobacco operate with fewer constraints as the government looks to
impose more taxes, including on cigarettes, to fund recovery from the March
11 earthquake and tsunami and the nuclear disaster that followed.
“The company will have freedom to manage itself,” said Mikihiko Yamato, a
research partner at Japan Invest KK. “If the market turns around and moves
the shares up, the government may sell its stake earlier than the original
plan.”
The government raised tobacco taxes 40 percent in October 2010, and Japanese
Health Minister Yoko Komiyama said Sept. 20 that tobacco taxes should go up
again until the average price of a pack of cigarettes is about 700 yen, or
75 percent higher than the current level, to cut medical costs. The
Democratic Party of Japan also proposed a 9.2 trillion yen overall tax
increase yesterday.
Share-Price Gain
The maker of Mild Seven and Camel cigarettes has gained 19 percent this year
in Tokyo trading, compared with a 16 percent decline for the Topix index.
Yesterday was the last day investors could buy shares that would be eligible
for Japan Tobacco’s next dividend payment of 4,000 yen, Hideyuki Yamamoto, a
spokesman for Japan Tobacco, said in an e-mail today.
“We are hoping Japan Tobacco will be fully privatized, which has been the
government’s policy,” Yamamoto said in a separate phone call, declining to
comment further. Yamamoto had said earlier this month that Japan Tobacco was
“seriously considering” buying back some shares if the government were to
sell.
Japan plans to spend 19 trillion yen over the next five years to rebuild
after the record temblor and tsunami devastated the northeast and prompted
world’s worst nuclear disaster in 25 years. While the government has already
approved two packages totaling about 6 trillion yen, the economy has shrunk
for three straight quarters.
Pressure to raise money now may have pushed the government to propose
selling more of its stake faster than planned, Yoshifumi Kikuchi, head of
dealing at Nissan Century Securities Co., said today by phone. To sell, the
government will need to rewrite a law that requires it to hold at least half
of the tobacco company.
“I didn’t expect the government to sell its entire stake,” Kikuchi said.
“It’s possible the government will sell its stake much earlier than planned
since the country’s finances are tight.”
–With assistance from Nicholas Wadhams in Beijing. Editors: Nicholas
Wadhams, Frank Longid
To contact the reporters on this story: Shunichi Ozasa in Tokyo at
sozasa@bloomberg.net; Miyuki Seguchi in Tokyo at mseguchi@bloomberg.net
To contact the editor responsible for this story: Frank Longid at
flongid@bloomberg.net
Sept. 28 (Bloomberg) — Japan’s ruling party proposed selling the
government’s majority stake in Japan Tobacco Inc., the world’s third-biggest
publicly traded cigarette maker, to help fund rebuilding after the March 11
earthquake.
Japan Tobacco fell 1.8 percent, the most since Sept. 5, to 356,500 yen at
the 3 p.m. close in Tokyo. The shares earlier today gained as much as 9.2
percent. The broader Topix index rose 0.7 percent.
The government may raise 1.8 trillion yen ($24 billion) by selling its 50.01
percent stake in Japan Tobacco at the stock’s current price. A sale may help
Japan Tobacco operate with fewer constraints as the government looks to
impose more taxes, including on cigarettes, to fund recovery from the March
11 earthquake and tsunami and the nuclear disaster that followed.
“The company will have freedom to manage itself,” said Mikihiko Yamato, a
research partner at Japan Invest KK. “If the market turns around and moves
the shares up, the government may sell its stake earlier than the original
plan.”
The government raised tobacco taxes 40 percent in October 2010, and Japanese
Health Minister Yoko Komiyama said Sept. 20 that tobacco taxes should go up
again until the average price of a pack of cigarettes is about 700 yen, or
75 percent higher than the current level, to cut medical costs. The
Democratic Party of Japan also proposed a 9.2 trillion yen overall tax
increase yesterday.
Share-Price Gain
The maker of Mild Seven and Camel cigarettes has gained 19 percent this year
in Tokyo trading, compared with a 16 percent decline for the Topix index.
Yesterday was the last day investors could buy shares that would be eligible
for Japan Tobacco’s next dividend payment of 4,000 yen, Hideyuki Yamamoto, a
spokesman for Japan Tobacco, said in an e-mail today.
“We are hoping Japan Tobacco will be fully privatized, which has been the
government’s policy,” Yamamoto said in a separate phone call, declining to
comment further. Yamamoto had said earlier this month that Japan Tobacco was
“seriously considering” buying back some shares if the government were to
sell.
Japan plans to spend 19 trillion yen over the next five years to rebuild
after the record temblor and tsunami devastated the northeast and prompted
world’s worst nuclear disaster in 25 years. While the government has already
approved two packages totaling about 6 trillion yen, the economy has shrunk
for three straight quarters.
Pressure to raise money now may have pushed the government to propose
selling more of its stake faster than planned, Yoshifumi Kikuchi, head of
dealing at Nissan Century Securities Co., said today by phone. To sell, the
government will need to rewrite a law that requires it to hold at least half
of the tobacco company.
“I didn’t expect the government to sell its entire stake,” Kikuchi said.
“It’s possible the government will sell its stake much earlier than planned
since the country’s finances are tight.”
–With assistance from Nicholas Wadhams in Beijing. Editors: Nicholas
Wadhams, Frank Longid
To contact the reporters on this story: Shunichi Ozasa in Tokyo at
sozasa@bloomberg.net; Miyuki Seguchi in Tokyo at mseguchi@bloomberg.net
To contact the editor responsible for this story: Frank Longid at
flongid@bloomberg.net