Japan Tobacco: to buy back Y250 bln of its shares if govt sells

JTI Building

Japan Tobacco, the world’s third largest cigarette company, said on Thursday it would buy back about 250 billion yen ($3.1 billion) of its outstanding shares if the government proceeds with a share sale during the current financial year to next March.

That would make the size of the planned share sale of Japan Tobacco by the Ministry of Finance around 500 billion yen based on Thursday’s close.

JTI Building

Japan Tobacco International

The government plans to use the proceeds from the share sale to help rebuild the tsunami-ravaged northeast coast.

Japan Tobacco, 50 percent owned by the government, would buy back part of the shares that the government is set to sell to avoid fluctuations in its stock price, said President Hiroshi Kimura told reporters.

The Ministry of Finance is allowed to sell up to 1.66 million Japan Tobacco shares, worth about 764 billion yen. The timing of the sale has not be determined.

Separately, the tobacco monopoly said it had no plans to comply with requests made by an activist fund the Childrens’ Investment Fund (TCI), which has been pressing the company to raise dividend payments and buy back a certain number of shares.

The London-based hedge fund has asked Japan Tobacco to double its annual dividend payments to 20,000 yen and buy back as many as 1.6 million shares or spend 800 billion yen for the buyback.

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