Citigroup has raised its offer price for Japanese
brokerage Nikko Cordial Corporation by 26 per cent to
$13.4 billion following Tokyo Stock Exchange''s decision
not to revoke the brokerage''s listing.
exchange''s surprise ruling came as a blow to Citigroup''s
move to use its leverage against a group of large North
American shareholders who had opposed the bank''s initial
offer as too low.
says it''s now willingness to pay more for Nikko, its biggest
Asian acquisition target, as it tries to expand into Japan''s
asset management market.
statement issued by Citigroup said it planned to make
a fresh offer at ¥1,700 a share, against the initial
¥1,350 it offered last week.
new offer which is a premium of 14 per cent to Nikko''s
last closing price,.values Nikko at roughly ¥1.578
trillion ($13.43 billion).
latest offer still falls short of the ¥2,000 a share
demanded by most of the funds. Even before the stock exchange''s
ruling, a group of US and Canadian investment funds that
own about 25 per cent of Nikko had complained Citigroup''s
first offer undervalued the firm by a third or more.
¥2,000 yen a share, Nikko''s valuation would roughly
equal price to book value ratio of its two larger, more
profitable rivals, Nomura Holdings Inc. and Daiwa Securities
shares moved over 10 per cent above Citigroup''s original
offer price in response to the Tokyo bourse''s decision.
They ended at ¥1,490 yen, up 6 per cent from the previous
close and the highest close since December, when Nikko''s
accounting mess prompted the TSE to begin a review of
had insisted that it would stick to its original offer,
hoping that the delisting threat would nudge Nikko to
accepting its offer. The threat of delisting had also
prompted credit rating agencies to downgrade the firm,
dragging its stock to a low of ¥980 before reports
of Citigroup''s interest emerged.
& Poor''s, meanwhile, began a review of Nikko''s creditrating
for a possible upgrade. The other global agencies, Moody''s
and Fitch, began reconsidering their ratings after Citigroup
unveiled its offer.