Jumbo Japan Tobacco US$10.4bn Privatisation Launched

Source from:  International Financing Review 02/26/2013

Japan's Ministry of Finance launched today the long-awaited ¥967bn (US$10.4bn) Japan Tobacco sell-down. The sale should be the biggest ECM deal in two years in Asia-Pacific, and the biggest Japanese equity offering since the ¥995bn Dai-ichi Life demutualisation IPO in March 2010.

The shares gained 1.43% today to close at ¥2,901, slightly below last Tuesday's ¥2,925 closing before IFR and Reuters reported that the leads had convened a syndicate meeting ahead of imminent deal launch. Typically, a syndicate meeting is called between a day and a week ahead of official launch.

The 42.5% global offering will price between March 11 and 13 at a discount range of 2%–4%. The government will sell 333.3m shares in the world's third-largest tobacco company. Separately, JT announced it would buy back up to ¥250bn of the shares, or 6.20% of the outstanding, to be sold by the state.

The state divestment will expand the free-float from the current 49.99% to more than 60%.

JT's share price has been on a sharp upswing, along with the rest of the Nikkei. Since the mandates were awarded in mid-June last year, JT's share price and the Nikkei have both risen by just over 30%.

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.

GS, Daiwa and JP Morgan are joint bookrunners on the 42.5% overseas tranche,. Also on the syndicate are Bank of America Merrill Lynch, Mizuho, Morgan Stanley, Nomura, UBS, Barclays, Citigroup, Deutsche Bank and SMBC Nikko.

On the 57.5% domestic tranche, Daiwa, GS and Mizuho are joint bookrunners. On the syndicate are Nomura, SMBC Nikko, Mitsubishi UFJ Morgan Stanley and another thirty houses with deal shares ranging from 2.03% to 0.04%.

Fee bids are understood to be in the 0.50% to 0.75% range. Enditem