The Tokyo Stock Exchange has announced that it would not de-list the scandal-tainted broker, triggering speculations that Citigroup will have to raise its $10.8 billion bid. Following the announcement shares of Nikko Cordial surged 6.7 percent. Just before the announcement, Nikko’s four largest shareholders, representing close to 27 percent share of the broker, rejected the bid by Citigroup for being too low. The latest decision of Tokyo Stock Exchange would escalate pressure on Citigroup to increase its offer.
Recently Citigroup has offered $10.8 billion takeover bid for the Nikko Cordial Corporation, a Japanese brokerage firm. The shareholder, Orbis Investment Management that controls 6.9 percent of Nikko, said in a statement that ‘its internal analysis supports a valuation of 2,000 yen ($16.90) a share’ and that Citigroup’s offer of 1,350 yen was unacceptable.’
Citigroup Inc. had stated early this week that it will continue to seek full control of Nikko shares through a tender offer bid that it first announced last week. The comment was made soon after the Tokyo Stock Exchange decided to keep shares of Nikko Cordial listed. But the company had hinted that it had no plans to alter the terms of its $10.8 billion bid for Nikko Cordial Corp. even after the surprise decision by the Tokyo Stock Exchange.
As a matter of fact, Nikko would provide Citigroup control of more than 100 branches, making it possible to offer services such as wealth management to the brokerage’s clients. Regulators in 2004 decided shut Citigroup’s private bank in Japan as it failed to comply with money-laundering rules.
