Investing.com -- Japan Tobacco shares were indicated nearly 19% lower on Friday after Russian President Vladimir Putin placed four of the tobacco maker's Russian units under temporary management, stripping control over a significant overseas business.
The stock's bid and ask prices both stood at ¥6,269 at 11:30 a.m. Tokyo time, indicating a 19.3% decline from Thursday's record closing high of ¥7,769. The broader Nikkei 225 was down 5.7% by midday.
Putin signed a decree on November 5 placing four businesses belonging to Japan Tobacco International (JTI), the group's international subsidiary, under the temporary management of Russian company Industrial Assets.
The affected entities are JTI Donskoy Tabak, JTI Yelets, Kres Neva and Petro, which operate manufacturing facilities in Russia.
The decree did not provide a reason for the move, which comes amid deteriorating relations between Tokyo and Moscow following Japan's sanctions against Russia over its invasion of Ukraine.
Russia accounts for about 10% of Japan Tobacco Group's revenue and 25% of its operating profit, making the takeover a significant risk to its international operations.
Japan Tobacco confirmed that the four subsidiaries had been placed under temporary management and said it was assessing the potential impact and its response. The measure transfers management control to the Russian-appointed administrator but does not automatically transfer legal ownership of the businesses.
Japan's government has protested the move through diplomatic channels and requested that Moscow withdraw the measure.
The development adds to a series of Russian takeovers of foreign-owned businesses operating in the country since the invasion of Ukraine.
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