* Says to buy back shares worth up to 100 bln Y, raise dividend
* Children’s Investment Fund wants 150 bln Y buyback, 150 Y div (Recasts with details, background)
By Taiga Uranaka
TOKYO, Feb 5 (Reuters) - Japan Tobacco is buying back its own shares worth up to 100 billion yen ($852.73 million) and paying investors a higher annual dividend, citing a goal of boosting shareholder returns.
The moves represent a partial nod by Japan Tobacco to demands by activist investor the Children’s Investment Fund (TCI), the company’s second-biggest shareholder, which has been pressing for a return of cash to shareholders.
Japan Tobacco said in a statement on Thursday the share buyback is designed to help improve earnings per share. The former state monopoly also said its board of directors was opposed to a TCI proposal for a 150 billion yen share buyback.
TCI, run by star hedge fund manager Chris Hohn, is also seeking an year-end dividend of 150 yen per share. The buyback and dividend demands will be put to voting at Japan Tobacco’s shareholders’ meeting scheduled in late March.
TCI made similar proposals in JT’s past three annual meetings but all of them were voted down by shareholders.
“(TCI’s proposals) would restrict business investments for future sustainable profit growth and become an obstacle to the improvement of corporate value,” JT’s board said.
The company, however, said it is raising annual dividend to 100 yen per share for 2014 from 96 yen in the previous year. That would take its payout ratio to 50.1 percent, compared to 29.7 percent in 2011.
The activist fund owns 1.77 percent of Japan Tobacco shares as of end-September. Japan’s finance ministry’s owns 33.4 percent.
Japan Tobacco, the seller of ‘Mevius’, ‘Winston’ and other cigarettes, announced on Wednesday it is exiting the beverage business after failing to gain scale in the mature domestic soft drinks market. ($1 = 117.2700 yen) (Editing by Edwina Gibbs and Muralikumar Anantharaman)