Japan Tobacco Shares Fall After Gallaher Deal

Shares of Japan Tobacco halted their recent bull run Monday, falling more than 4% as market participants said the company's plan to buy British cigarette maker Gallaher Group was now factored into the stock price.

Under the deal, which was announced following the close of trade Friday, Japan Tobacco will pay an agreed 7.5 billion pounds ($14.7 billion) in cash for the maker of Benson & Hedges and Silk Cut cigarettes.

The transaction is the biggest foreign acquisition by a Japanese company to date and could help Japan Tobacco offset declining sales in Japan by increasing its presence in Europe.

Speculation about the deal had sent Japan Tobacco shares soaring. At Friday's close, they had gained 18% in slightly more than a week and touched a lifetime high of 603,000 yen.

For the moment, investors were betting that further upside was likely to be limited for the stock. "Unless there are some new factors to drive the stock, it is kind of hard to imagine it gaining much from here right now," said Ken Masuda, senior dealer in equities at Shinko Securities.

Many of the sellers were likely anxious to pocket profits from the stock's advance, Masuda added.