Citigroup is “reviewing its options” on whether or not to buy out minority shareholders after it successfully won control of Nikko Cordial, in the largest foreign acquisition of a Japanese company.
The US bank, which is paying about $7.7bn to increase its stake in Japan’s third largest broker to 61 per cent, said it is “considering the possibility of increasing its shareholding after the completion of the tender offer”. Nevertheless, Citigroup, which already owned 4.9 per cent in Nikko Cordial prior to the deal, on Friday declared its offer a success.
“We’re thrilled with the results of the tender offer,” said Doug Peterson, CEO of Citigroup in Tokyo.
The US bank, which hoped to acquire 100 per cent of the Japanese broker, faced resistance from several investment funds, which rejected its offer as too cheap. Nikko Cordial’s shares on Friday closed up 2.78 per cent at Y1,738, or 2 per cent above Citigroup’s offer price of Y1,700.
The takeover of Japan’s third largest broker gives Citigroup an extensive distribution network in the world’s second largest economy and access to a broad corporate customer base.
It catapults Citigroup to a leading position in Japan’s securities market at a time when the country is expected to see a big shift of household savings into investment assets.
Nikko Cordial has 109 retail outlets throughout Japan and assets in custody of Y40,000bn ($334bn).
Buying out dissenting shareholders could raise the cost to above the Y1,758bn it would have cost the US bank to acquire all the remaining shares of Nikko Cordial it did not already own.