Japan Tobacco stake on sale to fund quake fix

JAPAN’S government is selling a third of its stake in Japan Tobacco to fundraise $10.4bn (£6.9bn) for rebuilding areas devastated by the 2011 earthquake and tsunami.

The country’s Ministry of Finance owns just over half of the $62bn former state monopoly, which is the world’s third biggest tobacco company. It is selling 33m shares, with the deal set to be priced between 11 and 13 March.

The offering – the largest such deal since the US Treasury’s $20.7bn sale of American International Group shares in September – comes as Japanese equities reached their highest levels in more than four years.

The fundraising comes on top of tax hikes and government share sales, which the Japanese parliament has introduced since 2011 to finance the estimated $270bn repair costs for the country’s north-east coast.

Japan also plans to sell shares of Japan Post Holdings, which runs the nation’s biggest savings institution, to boost the reconstruction fund.

Conditions for a sell-down in the government’s stake in Japan Tobacco have improved in recent months, with the benchmark Nikkei share average hitting a 53-month high yesterday.

Prior to the stake sale, Japan Tobacco, whose cigarette brands include Winston, Camel, Benson & Hedges and Mild Seven, will buy back as much as ¥ 250bn (£1.8bn) worth of its own shares, a regulatory filing yesterday showed.

JP Morgan Chase & Co, Daiwa Securities Group, Goldman Sachs Group and Mizuho Securities are the chosen underwriters for the offering.

Shares in Japan Tobacco closed yesterday at ¥ 2,901, up 1.4 per cent on the day and valuing the share sale at about ¥ 967bn.