Citigroup Inc said yesterday it successfully took over scandal-tainted brokerage Nikko Cordial Corp in a US$7.7 billion all-cash deal, the biggest acquisition by a foreign company in Japan.
Citigroup raised its stake in Japan's third-largest brokerage to 61.1 percent through an offer to buy outstanding stock from shareholders for ¥1,700 (US$14.24) each, the firm said in a statement.
The tender offer, which expired on Thursday, raised Citigroup's stake in Nikko Cordial from 4.9 percent and gives the US bank a strong foothold in the world's second-biggest economy.
"We are very pleased to now fully pursue our alliance with Nikko Cordial," Citigroup chairman and chief executive Charles Prince said in a news release.
Citigroup already operates a corporate investment banking joint venture with Nikko.
In a joint news conference with the head of Nikko Cordial, Citibank Japan chief executive Douglas Peterson stressed that Japan is an important market where he sees great potential for growth.
"I'm excited about the challenge of becoming a leading financial services group in Japan," he told reporters at a Tokyo hotel.
"Japan is a priority market. We are very committed, and we are also very hopeful that the Japanese markets will transform and become more innovative and competitive," he said.
Strategies for the partnership are still being hammered out, he said, while denying that any restructuring of Nikko Cordial employees was planned.
Citigroup said that 541.2 million Nikko shares were tendered and accepted.
The company had earlier raised its initial offer price by 26 percent to dispel shareholder opposition. It was hoping to win at least 50 percent control. A buyout of all shares would have totaled around US$13.35 billion.
The takeover highlights the growth of mergers and acquisitions (M&A) in Japan as the country emerges from more than a decade in the doldrums. M&A activity hit an all-time high last year, and Japan Tobacco recently notched the country's biggest takeover of a foreign company, with its US$15 billion buyout of Britain's Gallaher Group, a deal finalized earlier this month.
New York-based Citigroup launched the offer at ¥1,350 a share early last month, but upped the price to ¥1,700 a share after the Japanese brokerage's largest shareholders rejected the price as too low.
Analysts say the deal is a complementary match because Citigroup, long relatively weak in Japan, can gain a strong presence there through Nikko Cordial, which has more than 100 branches nationwide.
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