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Government sale of Japan Tobacco shares to launch within days – sources

Government sale of Japan Tobacco shares to launch within days – sources

19 February 2013

The Japanese government’s sale of a US$10bn stake in Japan Tobacco Inc, the world’s third-largest tobacco company, is expected to kick off within days after bankers met on Tuesday over deal details, sources close to the deal told Reuters.

Japan’s Ministry of Finance, which owns just over 50% of the tobacco company, has been planning to sell up to one-third of its holdings to raise funds for rebuilding areas devastated by the March 11, 2011, earthquake and tsunami.

Japan’s parliament in 2011 passed a set of bills including tax hikes and government share sales in state-owned companies to help finance the roughly US$270bn it expects to spend to rebuild the northeast coast.

The conditions for a sell-down have improved in recent months, with Japan’s stock market rising more than 30% over the past three months – and Japan Tobacco shares up 36% – as Prime Minister Shinzo Abe was swept to power in December elections after promising aggressive monetary and fiscal policies to tackle the country’s prolonged deflation.

Shares in Japan Tobacco closed on Tuesday at ¥2,925, down 0.9% on the day. That would value the stake the government could put up for sale at about ¥977bn (US$10.4bn).

Government officials said the timing for the sale has not been decided, although proceeds for the sale were incorporated into the budget for the fiscal year to end-March.

Japanese law requires the government to hold at least one-third of Japan Tobacco’s 2 billion shares outstanding.

The ministry last June selected JP Morgan Chase & Co, Daiwa Securities Group Inc, Goldman Sachs and Mizuho Securities as underwriters for the offering. Japan’s biggest brokerage, Nomura Holdings, was not selected as an underwriter after its involvement in an insider trading scandal. (Full Story)

The mandated banks invited other banks playing lesser roles in the sale to Tuesday’s meeting, which was called to inform them of the planned schedule for the share sale, the sources said.

Japan Tobacco has said it would buy back about ¥250bn of its shares if the government proceeded with the share sale in the fiscal year to March.

Japan also plans to sell shares of Japan Post Holdings Co, which runs the nation’s biggest savings institution, to raise money for reconstruction. (Full Story)
(Reporting by Mia Tahara-Stubbs of IFR and Emi Emoto of Reuters in Tokyo)

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