Citigroup has raised its bid for Nikko Cordial, Japan's third largest brokerage, by 26% to ¥1,700/share ($14.57 at ¥116.7/$1) or around $13.35 billion, after four of Nikko's largest shareholders publicly rejected its $10.8b, ¥1,350/share ($11.57) offer, and following yesterday's surprise news that Nikko would not be delisted from the Tokyo Stock Exchange. Citi's new bid came after the Tokyo exchange had closed -- Nikko's shares gained 6.1% on the day to ¥1,490. Citi said it will begin an all-cash tender "as soon as practicable." It currently owns a 4.9% stake. The key question is whether three of Nikko's four largest shareholders, who said they value it at more than ¥2,000/share, will accept the offer. The head of Asian Equity Management at RBC commented, "I think this is likely to be the beginning of some back and forth between the major shareholders and Citi on pricing. The question is whether Citi has a fallback position, at what price will it walk away and if there is another potential buyer out there."
Sources: Associated Press, Bloomberg, Reuters
Commentary: Citi's Bid for Nikko Could Be Stalled as Tokyo Exchange Keeps Nikko's Listing • Nikko Cordial Shareholder Momentum is Turning Against Citigroup • Two More Nikko Shareholders Claim Citi's Bid Unacceptable
Stocks/ETFs to watch: Citigroup (NYSE:C), Nikko Cordial (OTC:NIKOY), Mizuho Financial Group (NYSE:MFG). Competitors: Mitsubishi UFJ Financial Group (NYSE:MTU), ABN Amro Holding N.V. (ABN), Nomura Holdings (NYSE:NMR). ETFs: iShares S&P Global Financial Index Fund (NYSEARCA:IXG), iShares Dow Jones US Financial Services (NYSEARCA:IYG), Financial Select Sector SPDR (NYSEARCA:XLF)
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