Pressure on Citi to Raise Bid for Nikko Rises to New Heights

Instinet Japan says sell orders for Nikko Cordial at ¥1,900 -- 11.8% above Citigroup's ¥1,700 bid -- totaled 137 million shares today (vs. 71m yesterday), or 14% of shares outstanding. Harris Associates, one of Nikko's largest shareholders, joined Orbis Investment Management in offering their shares at an above bid price. Shares of Nikko gained 0.53% to ¥1,695, hitting ¥1,700 intra-day -- the first time it has traded at Citi's offer price. Reactions among analysts varied, with the head of Japanese equities at Yasuda Asset Management commenting, "It's a bargaining technique which is unprecedented and very political. The risk is that Citigroup will cancel the offer, which may hurt Nikko's share price." A portfolio manager at T&D Asset Management in Tokyo previously said, "It will be an incentive for Citigroup to raise the offer as it can monitor how many shareholders will be willing to sell at ¥1,900." A senior equities dealer at Shinko Securities, who does not think Citi will raise its bid, commented that "They are trying to send a message -- 'If you want Nikko so much, why don't you pay this level?'"

Sources: Bloomberg, Reuters
Commentary: Nikko Cordial: Shareholders Join Campaign Against Citigroup's Takeover Bid • Big Nikko Shareholder Signals Unwillingness to Accept Citi's Bid • Dance Over Nikko Cordial Continues
Stocks/ETFs to watch: Citigroup (C), Nikko Cordial (NIKOY) (JP: 8603), Mizuho Financial Group (MFG) (JP: 8411). Competitors: Mitsubishi UFJ Financial Group (MTU) (JP: 8306), Nomura Holdings (NMR) (JP: 8604), Daiwa Securities Group (DSECY.PK) (JP: 8601). 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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Comments

[BamBam]

Don't negotiate against yourself, Chuck Prince!