TOKYO -- Japan Tobacco Inc. stock fell Wednesday to the lowest level in six months after agreeing to pay about $5 billion for the international rights to Reynolds American Inc.'s Natural American Spirit division.
The stock dropped 6.7 percent to $30.82 by the close of trading in Tokyo to the lowest level since March 20. The benchmark Topix rose 2.6 percent.
Tokyo-based Japan Tobacco is offering to pay Natural American Spirit about 22 times more than the pretax earnings multiple of tobacco deals from the past five years. This will be the former Japanese monopoly's biggest acquisition since 2007, when it bought Gallaher Group, maker of Benson & Hedges cigarettes in Europe, for about $19 billion.
"We think the acquisition price can be viewed as overpriced," Satoshi Fujiwara, a Tokyo-based analyst at Nomura, wrote in a note to clients Wednesday.
Business on 10/01/2015