Japan Tobacco stock hit as $10bn stake sale nears
Japan's government is set to launch the sale of part of its stake in Japan Tobacco, a move that hit the company's stock as investors sold ahead of the $10 billion offering.
Shares in the world's third-largest tobacco company tumbled as much as 5.9 percent on Wednesday, after Reuters reported that the sale would launch in the coming days.
The offering, the largest such deal since the US Treasury's $20.7 billion sale of American International Group Inc shares in September, comes as Japanese equities hover near their highest levels in more than four years.
Japan Tobacco shares were down 3.2 percent at 2,832 yen in late morning, having fallen to a three-week low of 2,752 yen. The sale of a large block of shares usually prompts a fall in the price because it will increase the supply of publicly traded stock in the market.
Banks, including the four underwriters hired to manage the offering, met on Tuesday to iron out details of the deal, sources told Reuters.
Conditions for a sell-down in the government's stake in the $62 billion dollar company have improved, with Japan's Nikkei share average up nearly 25 percent over the past three months to its highest level since September 2008.
Japan Tobacco shares rose about 21 percent over the same period, part of a broad market rally that 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.
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