Citi's Bid for Nikko Could Be Stalled as Tokyo Exchange Keeps Nikko's Listing

After a stream of reports Nikko Cordial's four largest shareholders were rejecting Citigroup's $10.8 billion bid at ¥1,350/share ($11.40 at ¥118.4/$1), the latest news that the Tokyo Stock Exchange has decided not to delist Nikko comes as a surprise and means its offer will probably fail. Reuters notes Nikko will remain a Nikkei 225 component, "a move that will likely force index-tracking funds that have already sold out on expectations of a delisting to buy back the stock." A Tokyo-based analyst comments, "Institutional investors and arbitrageurs can be expected to buy back shares, and the market generally should react positively to the news." Nikko lost 0.43% to ¥1,404 ($11.86) in Monday trading ahead of the TSE's decision. Nikko faced a delisting due to an accounting scandal which the TSE said it "couldn't confirm that Nikko Cordial as a whole company was involved." Three of Nikko's four largest shareholders have said Nikko is worth at least ¥2,000 ($16.89) per share and the fourth values it at ¥1,700 - ¥1,800. Nikko's pink sheet traded ADRs closed at $12.05 on Friday.

Sources: Associated Press, Bloomberg, Forbes-XFN Newswire, Reuters
Commentary: Two More Nikko Shareholders Claim Citi's Bid Unacceptable • Second Nikko Shareholder Says Citi's Bid Too Low, Shares Trade Higher • Mizuho's Role In Citi's Bid for Nikko
Stocks/ETFs to watch: Citigroup (C), Nikko Cordial (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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