Last Sprint for Japan Tobacco

Source from:  International Financing Review (uk) (Thomson Reuters)  02/25/2013

The Japanese government's nearly ¥1trn (US$10.7bn) sale of Japan Tobacco shares, its fourth selldown, is in the final countdown to launch. Bankers are awaiting the Ministry of Finance's go-ahead on what will be Japan's biggest equity deal for years.

Last Tuesday, the leads convened a syndicate meeting ahead of deal launch, sources told IFR. Typically, a syndicate meeting is called between a day and a week ahead of an official launch. Bankers who were at the meeting confirmed the launch was imminent.

Hopes for the jumbo JT share sale have been dashed once before. Last November, former Prime Minister Yoshihiko Noda of the Democratic Party of Japan called a snap election and made it hard for the MoF to proceed with the plan. Now, with Shinzo Abe of the Liberal Democratic Party in power and stock prices on a sharp upswing sparked by his aggressive reflationary policies, the MoF is believed to have decided to go ahead with the sale.

Daiwa and Goldman Sachs are joint global co-ordinators, with Mizuho as co-bookrunner on the domestic portion and JP Morgan on the international tranche.

With a market capitalisation of about ¥5.7trn, the government's planned divestiture of its 17% stake in JT would be worth about ¥969bn, of which ¥250bn would be bought by JT as part of a pre-agreed share buyback.

The deal is expected to surpass the ¥995bn Dai-ichi Life demutualisation IPO in March 2010 and expand JT's free-float from the current 49.99% to more than 60%.

JT's share price dipped by 2.9% over the two days following news of the impending deal, but climbed back last Friday to ¥2,860, compared with Tuesday's ¥2,925 closing.

JT's share price and the Nikkei have both risen by just over 30% since the mandates were awarded in mid-June last year. JT's share price hit an all-time high of ¥3,540 in late December 2007. Enditem