http://online.wsj.com/article/BT-CO-20120423-704079.html
JT taps Executive Deputy President Koizumi as new president, with current
president Kimura to become chairman
— New management team will be the first not to have a former finance
ministry official as chairman or president
— Kimura suggests JT won’t return any short-term gains to shareholders
(Recasts, adds details of value of potential government share sale in 6th
paragraph.)
By Hiroyuki Kachi
OF DOW JONES NEWSWIRES
TOKYO (Dow Jones)–As Japan’s government lines up a multi-billion-dollar
share sale to slash its 50% holding in Japan Tobacco Inc. (2914.TO), the
cigarette giant Monday unveiled a new lead management pairing that for
the first time in 27 years doesn’t feature at least one former
bureaucrat.
The move comes as the world’s third-largest tobacco company by sales
volume, known as JT, continues to prepare and press the case for the full
privatization it says it needs to better compete with global rivals like
Morris International Inc. (PM) and British American Tobacco PLC (BTI).
JT says it wants to compete on an “equal footing” with its fully
privately owned rivals, and has stepped up efforts to obtain a bigger
slice of growing overseas markets with its global flagship brands, such
as Winston and Camel.
Its $15 billion acquisition of the U.K.’s Gallaher Group PLC in 2007–the
biggest-ever foreign acquisition by a Japanese company–helped it gain
ground in overseas markets such as Russia and the Middle East.
Meanwhile the government is working on plans to sell about 16.6% of the
outstanding shares in JT to raise funds for reconstruction after last
year’s earthquake and tsunami disasters.
At Monday’s closing share price of Y451,000, a 16.6% stake in JT is worth
about Y749 billion, or $9.2 billion. JT said earlier this year it will
consider buying back some of its own shares that the government is
planning to sell.
In a statement Monday, JT said Executive Deputy President Mitsuomi
Koizumi will become its new president and chief executive, while current
president and CEO Hiroshi Kimura will become chairman. Current chairman
and former finance ministry official Yoji Wakui will step down.
Neither of the new management duo previously worked in Japan’s Ministry
of Finance. But ever since the former national tobacco monopoly was
partially privatized in 1985, at least one of these posts — the top two
in the company’s hierarchy — has been occupied by a former finance
ministry official.
However, incoming chairman Kimura said there was no deliberate intention
to rid management of ex-MOF officials.
“We haven’t decided on the latest personnel matters with the firm
intention of removing ex-ministry officials,” he said, stressing that
managers would be chosen based on qualifications, regardless of any
former position in the public or private sectors.
The changes will take effect upon approval at a board meeting to follow a
general shareholders meeting in late June.
As well as seeking investor clearance at the meeting, JT will also field
proposals from minority shareholder The Children’s Investment Fund, a
U.K.-based activist hedge fund, which is seeking a shift in dividend
policy among other things.
Kimura said management had no major differences with the hedge fund,
other than on how soon the company would return profits to shareholders.
Earlier this year, TCI requested that JT management include three
proposals on the agenda for the annual shareholders meeting in June,
people familiar with the matter said. The proposals were a hike in the
dividend payout for this fiscal year through March to Y20,000 per share
from the planned Y4,000; a buyback of 1.6 million common shares by June
2013; and the cancellation of JT’s holdings of its own shares.
Kimura said JT won’t be returning any short-term benefits to
shareholders, and that the company would disclose full details Thursday
along with earnings results for the year ended March.
Earlier this year JT raised its net profit outlook for the 12 months by
17%, citing a steady recovery in its domestic tobacco business in the
wake of last year’s March 11 disasters.
-By Hiroyuki Kachi, Dow Jones Newswires; 813-6269-2789;
Hiroyuki.Kachi@dowjones.com