Nomura Holdings Inc. is in discussions to sell its stake of about one-third in the brokerage’s real estate unit to Japan Post Holdings Co., according to people familiar with the talks.

The talks are at an early stage, said the people, who asked not to be identified because the discussions were private.

The Tokyo-based postal giant is considering a tender offer bid to gain a majority stake in Nomura Real Estate Holdings Inc. in an effort to boost profits by strengthening its property business, NHK reported earlier Friday.

Nomura Real Estate has a market value of 389 billion yen ($3.4 billion) and Nomura Holdings was its biggest shareholder with about a 35 percent stake, according to Bloomberg-compiled data. Japan Post said last month it will book a 400.3 billion yen charge on a writedown of its investment in Australia’s Toll Holdings Ltd., turning a projected profit for the full year ended March into a loss.

Calls to Nomura Real Estate after normal working hours in Tokyo weren’t immediately answered. Nomura Holdings’ Tokyo-based spokesman Kenji Yamashita declined to comment.

Masatsugu Nagato, president of Japan Post Holdings, said in a statement after the report that the company is considering various possibilities for new capital alliances. In an interview he said that the company will continue to consider acquisitions if it can find a good target.

Japan Post made a written acquisition proposal to Nomura Real Estate in late last year, and has also had talks on the matter with Nomura Holdings, NHK reported.

Condominium Developer

Nomura Real Estate had net income of 47 billion yen in the 12 months ended March 31, down slightly from 47.2 billion yen a year earlier. The company is involved in the development and sale of condominiums, primarily in the Tokyo area, as well as in leasing office buildings, and brokerage and management businesses.

The developer had 1.59 trillion yen in assets at the end of March including real estate for sale or real estate to be sold of about 370 billion yen.

The government sold shares in Japan Post Holdings in 2015, mainly to retail investors, as part of a $12 billion IPO that included its banking and insurance subsidiaries. Its shares, which listed at 1,400 yen, have been trading below that level since March.

The NHK report came out after the Tokyo stock market closed. Japan Post shares rose 0.6 percent to 1,397 yen while Nomura Real Estate’s stock gained 0.9 percent to 2,028 yen.

Source:
courtesy of BLOOMBERG

by Takahiko Hyuga and Finbarr Flynn

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