Shares of Japan Aviation Electronics Industry have taken a hit following disappointing quarterly results and news that its parent company, NEC Corp., plans to reduce its stake in the electronics manufacturer. As a result, Japan Aviation's shares have dropped by 17% to 2,526 yen, with a previous decline of up to 18% earlier in the day. NEC Corp.'s shares have also fallen by 1.0%.
On Monday after the market closed, NEC announced its intention to sell approximately half of its 51% stake in Japan Aviation. In response, Japan Aviation will initiate a buyback program, planning to spend Y67.26 billion ($456 million) to repurchase up to 25.8 million shares. This repurchase will allow Japan Aviation to acquire the 23.8 million shares that NEC intends to offload. The buyback price is set at Y2,605 per share, representing a 14% discount compared to Monday's closing price.
Japan Aviation specializes in the production of connectors and other electronics equipment. As a listed subsidiary of a publicly-traded parent company, it has been exploring options to revamp its corporate structure in order to enhance its overall value.
During the nine-month period ending on December 31, the company's net profit declined by 20% compared to the previous year, amounting to Y10.78 billion. Additionally, revenue experienced a 6.8% decrease, reaching Y171.35 billion.