Citigroup/Nikko Cordial

Hold the champagne. Chuck Prince has pulled off his biggest takeover since taking the reins at Citigroup, but, having secured just 61 per cent of the shares in Nikko Cordial, for a price of $7.7bn, he takes home an imperfect trophy.

Since it holds less than two-thirds of the shares, Citigroup will need shareholder approval to carry out significant reforms, such as unit closures, limiting its ability to restructure Japan’s third biggest brokerage. Many of the minority investors look set to be the same awkward squad of funds that were pushing for a better price, so their co-operation is not guaranteed. Meanwhile, morale in what is a people business may suffer and vultures will hover over areas perceived to be for the chop. Citigroup must also keep Nikko Cordial’s stock exchange listing, exacting a financial and regulatory cost. Finally, on the assumption that Citigroup is going to create value from the deal, it must now see 39 per cent of that seep away to minorities.

Citigroup’s Japanese conquest is thus not complete. One option is to mop up sufficient shares in the market to push itself over the 67 per cent mark and seek to squeeze out minorities over time. That could entail stumping up a higher price, or waiting for the dissenting funds to blink first. Capital structure aside, Citigroup faces the challenge of building a full-service banking group around a scandal-rocked brokerage. Creating a one-stop financial powerhouse capable of sweeping up massive savings and recycling capital through a big branch network sounds like a no-brainer. But execution is harder, or others would have beaten the US giant to it. Indeed, there is even a chance that Citigroup, which advised itself on the acquisition, has tarnished its own reputation in Japan. Would-be acquirers may think twice before engaging an adviser that failed to win two-thirds of its own target.