Nikko Cordial gained 3.1% to ¥1,410 today in Tokyo and now trades nearly 4.5% higher than Citigroup's bid of ¥1,350/share (totaling $10.8 billion). Southeastern Asset Management, Nikko's second largest shareholder with a 6.6% stake, claims Nikko is worth more than ¥2,000/share. This follows a similar statement by Harris Associates, Nikko's largest investor with a 7.5% stake. Citigroup, a 4.9% shareholder, is set to initiate its tender by next Tuesday and has a right to cancel its offer if it cannot gain majority control. Unconfirmed sources say Nikko has asked Mizuho Financial Group, which owns 4.8% of Nikko, to sell its stake to Citi. Mizuho however, appears to be holding out for a possible tie-up with Citi. Reuters notes Nikko, Japan's third largest brokerage, is valued at 1.6x book value, compared to 2.3x for Nomura (#1) and 2.6x for Daiwa Securities (#2). Nikko faces a possible delisting by the Tokyo Stock Exchange related to an accounting scandal.
Sources: Bloomberg, Reuters
Commentary: Nikko Cordial's Largest Shareholder Says Citi's Bid Too Cheap • Nikko Cordial: What Should Shareholders Do Now? • Citigroup Bids $10.8 Billion for Nikko Cordial
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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