Japan to raise $10 billion through Japan Tobacco share sale

Mon Feb 25, 2013 5:51am EST
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By Shinichi Saoshiro

TOKYO (Reuters) - Japan's government will sell around a third of its stake in Japan Tobacco Inc (2914.T: Quote), the world's No.3 tobacco company, to raise about $10.4 billion for reconstruction of areas devastated by a 2011 earthquake and tsunami.

The Ministry of Finance, which owns just over 50 percent of the $62 billion former state monopoly, is selling 333 million shares, according to a regulatory filing on Monday, with the deal to be priced between March 11-13.

The offering, the largest such deal since the U.S. Treasury's $20.7 billion sale of American International Group Inc (AIG.N: Quote) shares in September, comes as Japanese equities scale their highest levels in more than four years.

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 $270 billion it expects to spend to rebuild the northeast coast after the quake in March that year.

Reuters reported early last week that the stake sale would be launched within days.

Conditions for a sell-down in the government's stake in Japan Tobacco have improved in recent months, with the benchmark Nikkei share average .N225 hitting a 53-month high on Monday. A broad market rally began in mid-November after the calling of an early election that put Prime Minister Shinzo Abe in power a month later. Abe has promised aggressive monetary and fiscal policies to tackle prolonged deflation.

Prior to the stake sale, Japan Tobacco, whose cigarette brands include Winston, Camel, Benson & Hedges and Mild Seven, will buy back as much as 250 billion yen ($2.7 billion) worth of its own shares, Monday's filing showed.


A man walks past a logo of Japan Tobacco Inc (JT) outside the company's headquarters building in Tokyo February 20, 2013. REUTERS/Toru Hanai