Deals
Japan Tobacco Lost $9 Billion After Betting on American Spirit
- Shares plunged 14% since Monday after deal was first reported
- Sales needs to quintuple in 5 years to make sense: Nomura
A customer buys a pack of cigarettes from a tobacco kiosk in Tokyo.
Photographer: Akio Kon/BloombergThis article is for subscribers only.
Japan Tobacco Inc. is making one of the most expensive deals in the tobacco world in a bet that more smokers, especially Japanese ones, will get hooked on Natural American Spirit cigarettes. It’s already lost twice the $5 billion it offered through the decline in the value of its shares.
About 1.2 trillion yen ($10 billion) has been wiped out from JT’s market value since Monday’s open, after Bloomberg reported Sept. 25 that Asia’s largest listed tobacco company would agree to buy international rights to Reynolds American Inc.’s Natural American Spirit brand. JT confirmed the deal late Tuesday, at about 286 times the target’s pretax profit.