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An activist hedge fund helps light up an old gasper

The Economist – There is an almost quaint—if you can stand it—old-world aura about smoking in Japan, like watching a 1950s film noir. Smoke billows out of bars. The government holds down cigarette prices. In some cities, you can puff away indoors, but not on the pavement.

A very modern battle has been waged over Japan’s tobacco industry, however. It has pitted an activist hedge fund from London, The Children’s Investment Fund (TCI), against the state-backed cigarette company, Japan Tobacco (JT), the seller of Camel and Winston brands outside America. On February 25th the fight reached a denouement when the government said it would sell shares worth 967 billion yen ($10.3 billion), reducing its 50% stake to 33%. It said the money would be used to help cover reconstruction costs after the 2011 earthquake and tsunami. TCI claimed it as a bounty to shareholders, too.

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