Investors controlling at least 28 percent of Nikko are seeking a better price, up from 21 percent two weeks ago. Citigroup raised its bid 26 percent to 1,700 yen ($14) a share in March and has ruled out another increase.
Failure to win more than two-thirds of Nikko's equity would leave the New York-based bank unable to exercise full power over actions such as mergers or the sale of a unit. That could force the U.S. bank to seek compromises over major decisions with investors who resisted its offer. The bid expires April 26.
"The freedom of management will be constrained,'' said Kenji Mizutani, professor of economics and business at Chukyo University in Nagoya and a former executive director at Mitsubishi UFJ Financial Group Inc. "Lack of absolute control may make it difficult for Citigroup to sell units to recoup some of its investment.''
This a bit further on in the piece:
Adding to Citigroup's difficulties, index-linked funds at Japanese firms such as Nomura Asset Management Co. and Daiwa Asset Management Co. typically don't tender their shares in a takeover bid. Such funds together hold about 8 percent of Nikko.
Managers of domestic index-linked funds tend to keep their holdings in companies that get bought without being delisted to maintain a correlation between index and portfolio performance. In Japan, a single shareholder or group must control more than 75 percent of a company to have it removed from trading.
I'm just posting bits of the article here. Followers of this situation will want to read the whole report. But note this piece of interesting speculation at the end:
Citigroup may complete the purchase even if it fails to win full control, and later try to add to its holding, investor Patrick Lemmens said.
"Citigroup put a reasonably priced offer on the table,'' said Lemmens, who helps manage $3.5 billion at ABN Amro Asset Management in Amsterdam. "They will take what they can now and buy the remaining stakes later.''