Sullivan & Cromwell has advised Japan Tobacco Inc and Japan’s Ministry of Finance on the latter’s 742.8 billion yen ($7.8 billion) public sale of its stake in the Japanese tobacco company.

Tokyo-based partner Izumi Akai led the Sullivan & Cromwell team on the transaction, while Mori Hamada & Matsumoto served as Japanese counsel to Japan Tobacco and Japan’s Ministry of Finance.

A Simpson Thacher & Bartlett team led by Tokyo corporate partner Alan Cannon represented the international managers – JP Morgan Chase & Co, Daiwa Securities Co., and Goldman Sachs Grop Inc.

Nagashima Ohno & Tsunematsu advised the international managers on Japanese law.

Japan’s Ministry of Finance, which owns just over 50 percent of Japan Tobacco, is selling 333 million shares to cut its stake in the world’s No.3 tobacco company to one-third. Japanese law requires the government to hold at least one-third of Japan Tobacco’s two billion shares outstanding.

The proceeds will be used to fund the reconstruction of areas devastated by the 2011 earthquake and tsunami.

Shares in Japan Tobacco have outperformed rival Philip Morris International Inc and British American Tobacco Plc since the bill approving the sell-down was approved in 2011, Thomson Reuters data shows, with investors welcoming reduced state control.

The offering, the largest such deal since the U.S. Treasury’s $20.7 billion sale of American International Group Inc shares in September, comes as Japanese equities scale their highest levels in more than four years.

Japan’s large and liquid stock market is used to digesting big offerings, such as the $8.5 billion IPO of Japan Airlines last September and a $2.3 billion follow-on deal by All Nippon Airways. Last month, U.S. private equity firm Cerberus Capital Management raised $1.7 billion by selling shares in Japan's Aozora Bank Ltd.

Overall, equity issuance in Japan rose 16.8 percent last year to $26.4 billion, driven by large IPOs and a flurry of activity that made 2012 the busiest year for deals since 2008, Thomson Reuters data showed.

Japan also plans to sell shares of Japan Post Holdings Co, which runs the nation's biggest savings institution, to raise money for post-quake reconstruction.

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