Japanese financial groups including Tokio Marine, Sompo and two MS&AD units will sell shares worth ¥535 billion ($3.3 billion) in Honda Motor to settle cross-shareholdings, a filing with the regulator showed on Thursday.
Mitsubishi UFJ and Mizuho, Japan’s largest and third-largest financial groups, also plan to participate in the sale, a sign that the phasing out of cross-shareholdings is gaining momentum as part of Japan’s corporate governance reforms.
Reuters reported the insurers’ plans earlier this week.
Cross-shareholding, or companies holding shares in each other, has long been seen as a way to strengthen business ties in Japan. But governance experts and foreign investors said it leads to lax management by shielding management from shareholders.
The secondary share offering from a total of 10 financial institutions would amount to 300 million shares including over-allotment, with the price yet to be determined. Honda shares closed at ¥1,791 on Thursday, valuing the offering at about ¥535 billion.
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 up to ¥300 billion of its own shares during the current fiscal year. It announced Thursday that no further share buybacks will take place.
Honda was one of the insurers’ five largest cross-shareholders, excluding Aioi Nissay Dowa Insurance, securities filings from March show.
