Citigroup Makes Tender Offer For Nikko Cordial Of Japan

Tuesday, March 6th 2007, 6:45 am
By: News On 6

TOKYO (AP) _ Citigroup announced a tender offer Tuesday to raise its stake in Nikko Cordial to more than 50 percent and make the scandal-tainted Japanese securities company a subsidiary, strengthening its presence in the country.

The purchase, valued at up to 1.253 trillion yen (US$10.8 billion; euro8.25 billion), if realized, would be the biggest foreign acquisition of a Japanese brokerage.

The U.S. banking group said it will pay 1,350 yen (US$11.63; euro8.89) for each Nikko Cordial share in the tender offer, which will start within one week.

The announcement follows weeks of speculation that Citigroup Inc., the largest U.S. financial services company, which already owns 4.9 percent of Nikko Cordial Corp., plans to raise its stake in the troubled brokerage, Japan's third-largest.

Taking control of Nikko Cordial, which has more than 100 branches nationwide, would be a boost for Citigroup's presence in Japan for selling mutual funds and other services that are expected to grow in the world's second-largest economy.

Although Japan has long been infamous as guarded, even closed, against foreign takeovers, analysts said a Citigroup-Nikko Cordial match could be a plus for both sides, partly because the brokerage's image has been tarnished, and so allying with an outsider like Citigroup could help clean up its image.

``It could signal a fresh start, and a break with the ghosts of the pasts, and so in that foreign capital can be a good thing,'' said Mitsushige Akino, general manager at Ichiyoshi Investment Management in Tokyo.

Akino said the deal signals a good complementary match as long as Citigroup kept much of Nikko Cordial's operations intact, with Nikko Cordial gaining credibility from Citigroup's global presence, while allowing Citigroup to strengthen its relatively weak foothold in Japan.