Citigroup announced a $10.8 billion (¥1,350/share) bid for troubled Japanese brokerage Nikko Cordial, of which it currently owns a 4.9% stake. Citi is reportedly aiming for at least a 50% stake, as rival Mizuho, a 4.8% shareholder of Nikko, has already retreated from trying to make an acquisition. Shares of Nikko surged 14% to ¥1,340 today ahead of Citigroup's announcement. Bloomberg reports this will be the second largest foreign acquisition of a Japanese company and the biggest by Citigroup since Charles Prince became CEO in 2003. Citi also owns a 49% stake of an investment banking joint venture with Nikko. Nikko faces a possible delisting by the Tokyo Stock Exchange, which is set to make its decision on March 9. Harris Associates recently became Nikko's biggest shareholder, increasing its ownership to 7.2% from 6.2%. The chief investment officer at Harris comments, "The business is worth over 2,000 yen, for sure, in the long term."
Sources: Bloomberg, Reuters
Commentary: Nikko Cordial's Roller Coaster Ride Continues • Citigroup Has Decisions to Make Amidst Nikko Cordial Uncertainty • Citi Got a Good Deal on the Online Bank 'Egg'
Stocks/ETFs to watch: Citigroup (C), Nikko Cordial (OTC:NIKOY), Mizuho Financial Group (MFG). Competitors: Mitsubishi UFJ Financial Group (MTU), ABN Amro Holding N.V. (ABN), Nomura Holdings (NMR). ETFs: iShares S&P Global Financial Index Fund (IXG), iShares Dow Jones US Financial Services (IYG), Financial Select Sector SPDR (XLF)
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