Tokyo Stocks Slide Ahead of Sales Tax Decision

Hiruki Nakamura
25 Sep, 2013
New York City

Stocks in Tokyo eased ahead of sales tax decision by prime minister next week. Tokyo Electron agreed to be acquired by Applied Materials in all stock deal valued at $7 billion. Electronics and auto makers led the decliners in Tokyo trading today.

[R]4:35 PM Tokyo – Stocks in Tokyo eased ahead of sales tax decision by prime minister next week. Tokyo Electron agreed to be acquired by Applied Materials in all stock deal valued at $7 billion. Electronics and auto makers led the decliners in Tokyo trading today.[/R]

Stocks in Tokyo trading eased as political tensions in the U.S. rose ahead of possible government shut down but the Tokyo Electron $7 billion deal supported tech stocks.

The Nikkei 225 Average decreased 0.8% to 14,620.53 and the broader Topix index fell 0.3% to 1,211.15.

Stocks traded higher at the opening but quickly descended into negative territory ahead of October 1 decision by Prime Minister Shinzo Abe whether to increase sales tax to 8% from 5%.

In regional trading, Hang Seng index gained 0.13% in Hong Kong and Shanghai Composite Index declined 0.4%.

Tokyo Electron in $7 Billion Deal

Applied Materials Inc agreed to acquire Tokyo Electron Ltd for $9.39 billion in stock payment.

The deal is the largest purchase of a Japanese company by any foreign company in six years as the global economy recovers but chip makers remain mired in excess capacity.

The deal between the two chip makers is worth $7 billion after eliminating $2.5 billion cash held. The merged entity will have $29 billion in revenues based on 2012 data and Applied Materials shareholders would control 68% of the combined company.

Tokyo Electron shareholders will receive 3.25 shares in the merged entity for each share held and the offer valued the Japan based chip maker for 16.5 times operating earnings.

The recently appointed Chief Executive of Applied Materials, Gary Dickerson will lead the merged company and the merger is expected to be complete by the middle of next year.

Stocks in Review

Tokyo Electron increased soared 13% in Tokyo trading to 5,490 yen and Applied Materials advanced 9% in the pre-market trading.

Mitsubishi UFJ Financial Group closed up 3 yen to 652 and Mizuho Financial added 1 yen yo 223 yen.

Nomura Holdings decreased 4 yen to 789 yen.

Sony Corporation decreased 9 yen to 2,088 yen and Nikon Corp declined 28 yen to 1,740 yen. Canon Inc fell 25 yen to 3,130 yen.

Softbank Corp eased 90 yen to 6,540 yen and Fast Retailing Co Ltd plunged 2.3% to 36,350 yen.

Toyota Motor Corp increased 30 yen to close at 6,470 yen and Honda Motor Corp declined 5 yen to 3,835 yen. Nissan Motor Co. Ltd edged up 3 yen to 1,017 yen.