Citigroup Secures Control of Nikko Cordial
Citigroup said on Friday its takeover bid for Japan's Nikko Cordial had succeeded after Nikko
shareholders tendered a majority of the brokerage's stock.
The result came after the close of a contentious tender offer for the Japanese company. Some big Nikko shareholders wanted Citigroup to offer more for the firm.
The top U.S. bank said the tender gave it control of 61% of Nikko at a cost of $7.7 billion. It was offering to buy all Nikko shares tendered and was seeking a minimum 50% stake.
The 1,700 yen-a-share offer expired on Thursday.
One analyst said Nikko would boost Citigroup. "I do think it's an excellent move -- I think it's going to be a home run for Citigroup," said Richard Bove, bank analyst at Punk Ziegel. "The opportunity to penetrate the second wealthiest economy in the world from a propriety position puts Citigroup in a very strong and positive situation."
But William Smith, chief executive of SAM Advisors, a Citi shareholder, was more skeptical. Smith said he was pleased Citi did not pay more than 1,700 yen per share.
However he added: "Chuck Prince (Citi CEO) is spending a big amount of money and it gives them exposure in Japan -- but what it does it actually add to the bottom line?"
Two big Nikko shareholders had told Reuters in the past week they would not tender at Citi's offer price of 1,700 yen per share.
Orbis Investment Management and Southeastern Asset Management both said they would not tender their respective Nikko stakes of 5.8% and 6.6% to Citi at 1,700 yen.
Orbis said last week that about 29% of Nikko shares were being offered at 1,900 yen per share, above Citigroup's offer. An Orbis spokesman said on Thursday it was too soon to comment on the outcome of the tender offer.
Management at Nikko has agreed to the Citigroup deal, which would be the biggest-ever foreign buyout of a Japanese company.
Citigroup raised its bid price from 1,350 yen per share after Nikko escaped a possible delisting by the Tokyo Stock Exchange over an accounting scandal.