TOKYO (Reuters) -Japanese financial groups including Tokio Marine, Sompo and two MS&AD units will sell Honda (NYSE:) Auto stocks worth 535 billion yen ($3.3 billion) to unwind cross-shareholdings, a regulatory filing showed on Thursday.
Mitsubishi UFJ (NYSE:) and Mizuho, Japan’s first and third largest financial groups, also plan to participate in the sale, a sign that the deleveraging of cross-shareholdings is accelerating as part of Japan’s reforms of corporate governance.
Reuters reported the insurers’ plans earlier this week.
Cross-shareholding, or companies that hold shares in each other, has long been seen in Japan as a way to strengthen business ties. But governance experts and foreign investors say this leads to lax governance by shielding management from shareholders.
The secondary share offering by a total of ten financial institutions would comprise 300 million shares, including over-allotment, with the price yet to be determined. Honda’s shares ended Thursday at 1,791 yen, valuing the offering at about 535 billion yen.
The four non-life insurers, including MS&AD Insurance subsidiaries Mitsui Sumitomo Insurance and Aioi Nissay Dowa, have previously said they would reduce their entire cross-shareholdings to zero within a few years, in response to a price-fixing scandal last year.
Honda has already announced plans to buy back 300 billion yen worth of its own shares during the current fiscal year. It was announced on Thursday that no more shares will be repurchased.
Honda was one of the top five cross-shareholding companies for the insurers, excluding Aioi Nissay Dowa Insurance, according to securities filings in March.
($1 = 161.4100 yen)
