Nikko Cordial: What Should Shareholders Do Now?

| About: Nikko Cordial (NIKOY)
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The easy answer for shareholders is: wait. Wait until your broker notifies you that Citigroup (NYSE:C) is offering 1350 yen (roughly US$11.60) for your shares (or as in my case, ADRs).

What then?

Most likely accept the offer. I say "most likely" because David Herro of Harris Associates has said his firm is unhappy with Citi's offering price. Harris Associates is the single largest Nikko (OTC:NIKOY) Cordial shareholder. According to the linked Bloomberg report, Nikko's four largest shareholders are Harris, Orbis, Southeastern Asset Management, and Cundill/Mackenzie Financial. Together they own about 26% of Nikko. The sentiment seems not to be favoring a shareholder revolt.

That could change. But that's the way things stand now.

I'd like to see another big bank make a bid. The major problem with that scenario is that Mizuho Financial is seen as the candidate for that role -- and most likely won't act. Mizuho is thought to want to establish ties with Citigroup. And getting into a bidding war wouldn't exactly enhance relations.

Still, another player could emerge. Just let's not count on it.

Absent a widespread shareholder rebellion, the gain on my remaining Nikko ADRs will be more than 34%. Factoring in my sale of one-third of the stake for $16.30 in March 2006 -- plus some dividends collected along the way -- and the total return on this investment will be more.

How much more will become known in time.