Citigroup closes in on Nikko Cordial, Mizuho to sell 4.8%

TOKYO: Citigroup, the largest US bank, moved a step closer to acquiring Japanese brokerage Nikko Cordial after Mizuho Financial Group said it plans to accept the $13.4-billion takeover offer. Mizuho, Japan’s second-biggest bank, will back Citigroup’s bid of 1,700 yen a share, said Masako Shiono, Mizuho’s Tokyo-based spokeswoman, in a telephone interview on Tuesday. Mizuho’s 4.8% stake is worth about 80 billion yen ($680 million) at the offer price.

Citigroup’s earlier offer of 1,350 yen a share was opposed by Nikko’s four biggest shareholders led by Chicago-based Harris Associates. Harris, Bermuda-based Orbis Investment Management, Southeastern Asset Management of Memphis, Tennessee, and Toronto-based Mackenzie Financial, which own a combined 27% of Nikko, haven’t publicly disclosed whether they support Citigroup’s higher bid.

The offer from Citigroup probably will succeed, said Mana Nakazora, chief credit analyst at JPMorgan Securities Japan in Tokyo. “Overseas funds cannot keep asking for a higher price as Citigroup will just walk away.” Money managers at Harris, Orbis and Southeastern Asset Management have said Nikko is worth at least 2,000 yen a share.

Mizuho scrapped a plan last month to acquire Nikko and instead will seek an investment banking alliance with Citigroup, two company officials said. “Mizuho’s decision will help Citigroup move a step closer to success,”said Keisuke Moriyama, a Tokyo-based analyst at Nomura Holdings. “It will guide other shareholders.”