TOKYO (Reuters) – Four of Japan's largest property and casualty insurers and other financial firms plan to sell about 500 billion yen ($3.1 billion) of shares Sling (NYSE:) Motor, three people said, as the unraveling of cross-shareholding practices accelerates.
Tokio Marine Holdings Sompo Holdings and two units of MS&AD Insurance Group will jointly sell shares in the automaker, said the people, who asked not to be identified because the information has not been made public.
Other financial institutions will also reduce their stakes in Honda, bringing the total sale to about 500 billion yen based on Honda's current share price, the sources said.
Honda will soon formally give insurers the green light to sell their shares, the sources said.
The carmaker has already announced plans to buy back up to 300 billion yen of its shares during the current financial year, a move that could help absorb some of the impact of the sale.
Honda declined to comment on the sale of the insurers, saying only that the information was not something it had announced itself.
Spokespeople for Tokio Marine, Sompo and MS&AD declined to comment.
The four companies, which include MS&AD units Mitsui Sumitomo Insurance and Aioi Nissay Dowa Insurance, have previously said they would reduce all cross-shareholding arrangements to zero.
Honda is one of the top five companies with cross-shareholdings by insurers, excluding Aioi Nissay Dowa Insurance, according to securities filings as of March.
The share sale by a high-profile company, in which insurers hold significant stakes, is the latest sign that the unravelling of cross-shareholdings is gathering pace in Japan.
Cross-shareholding, or companies taking stakes in each other, has long been seen as a way to cement business ties. However, governance experts and foreign investors have said it shields management from shareholders, leading to lax governance.
The four insurers, or their parents, held more than 300 billion yen of Honda shares as of March, with Tokio Marine holding 161 billion yen, Sompo Japan holding 81 billion yen, Mitsui Sumitomo holding 73 billion yen and Aioi Nissay holding 2.8 billion yen, securities filings showed.
In total, the four held around 9 trillion yen in cross-shareholdings as of March, with Toyota Motor (NYSE:), Shin-etsu Chemical and Itochu are among the top names, the documents showed.
In December, Japan's Financial Services Agency issued a business improvement order against the four insurers after it was discovered that they had fixed the prices of their corporate insurance. The regulator ordered them to reduce their cross-shareholdings.
Honda counted nearly 50 companies in which it owns stakes as of March, including Renesas Electronics, Mitsubishi UFJ (NYSE:) Financial Group and Tokio Marine Holdings, shareholder documents showed.
Honda shares turned negative in late trading on Tuesday following the report, ending the day down 1.45 percent at 1,735 yen, after earlier rising as high as 1,801 yen.
($1 = 161.5900 yen)
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