Japan Tobacco Drops on Report Share Sale Due Soon: Tokyo Mover

Source from:  Bloomberg  02/20/2013

Japan Tobacco Inc. dropped the most in almost two years in Tokyo trading after Reuters reported the government will begin selling shares it owns in the company within days.

Asia's largest cigarette maker by market value fell as much as 5.9 percent to 2,752 yen, headed for its biggest decline since March 2011, before trading at 2817 yen as of 9:29 a.m. local time. Bankers met yesterday to discuss details of the share sale, Reuters reported, citing sources close to the deal.

The former tobacco monopoly has gained 15 percent this year in Tokyo trading, surpassing an 10 percent gain in the benchmark Nikkei 225 Stock Average. A law passed in 2011 allows the Ministry of Finance, which owns about 50 percent of Japan Tobacco, to sell one-third of its entire holding to help pay for earthquake rebuilding.

The maker of Mild Seven cigarettes has said it plans to buy back 250 billion yen of the shares to be sold while the rest will be marketed to investors.

The Finance Ministry hasn't made a decision on the share sale as yet, according to a government official who asked not to be named. Japan Tobacco spokesman Hideyuki Yamamoto declined to comment on the timing of the share sale.

Daiwa Securities Group Inc. and Goldman Sachs Group Inc. were selected by the Japanese government to lead the global sale, the ministry said in June. Mizuho Securities Co. will help manage the offering in Japan and JPMorgan Chase & Co. will assist with the sale abroad, it said.

The ministry decided not to sell the stake last year due to weak economic conditions and political uncertainty, a ministry official said in November. Enditem