Japan Tobacco Buys Gallaher Shares in Market

Japan Tobacco said Friday it had bought about 2.14% of takeover target Gallaher's shares
for about 160 million pounds (US$316 million) after the British cigarette maker's shares fell below its bid price.

JT, the world's third-biggest cigarette maker, said it had bought around 14.1 million Gallaher shares since Monday from the market. JT spokeswoman Yukiko Seto said it hopes the purchase will help it successfully complete the takeover.

The move could also help the Japanese company reduce its acquisition costs and lessen the chances of another firm making a play for Gallaher.

In what would be the biggest-ever foreign acquisition by a Japanese company, Japan Tobacco agreed in December to pay 11.4 pounds in cash per share for Gallaher, valuing it at 7.5 billion pounds ($14.81 billion) or 9.75 billion pounds including debt.

Under British law, JT is allowed to buy up to 30% of Gallaher shares on the market as long as the British firm's share price is below the bid price.

Shares in Gallaher jumped above 11.40 pounds before the takeover announcement but have recently been hovering below that level. They closed at 11.39 pounds on Thursday in London.