Citigroup to Acquire Rest of Nikko Cordial’s Shares
The largest U.S. bank, Citigroup Inc., announced that it will buy the remaining interest of Nikko Cordial Corp. for 530 billion yen ($4.6 billion), making the Japanese brokerage a wholly owned subsidiary.
At a briefing in Tokyo today, Citigroup Japan Holdings Ltd. Chief Executive Officer Douglas Peterson said that the bank will use its own stock to pay for the 32 percent stake in Nikko Cordial in a deal that values the Japanese company's shares around 1,700 yen each. Nikko Cordial shares closed at 1,462 yen today.
Citigroup is taking advantage of rules introduced in May allowing a foreign company's local subsidiary to buy a Japanese firm by using shares in the parent. The New York-based company yesterday said third-quarter profit plunged 60 percent after $5.9 billion of credit and trading losses on loans and mortgage-backed securities.
“It is an appropriate method'' to buy the rest of Nikko Cordial through a share swap, Peterson said. The move will allow the transaction to be completed “without undue delay.''
Nikko Cordial will be delisted from the Tokyo Stock Exchange after the expected completion of the purchase in January, Peterson and Nikko Chief Executive Officer Shoji Kuwashima said.
Citigroup will seek approval from Tokyo-based Nikko Cordial's shareholders at a special meeting on Dec. 19.
Published on October 2, 2007
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