Citigroup Gains Full Control of Nikko Cordial

Citigroup has announced it now owns 69% of Nikko Cordial (NIKOY/OTC) -- more than the two thirds required to control the company:

The New York-based bank needed to raise its stake to two- thirds to be able to merge or sell units without the consent of other shareholders. Chief Executive Officer Charles Prince, under pressure from investors to boost profit and the company's share price, gained more than 100 branches in Japan from the Nikko acquisition, adding to purchases in China and Taiwan over the past six months.

Reports are that Citigroup added to its stake at 1,700 yen per share -- some in a private placement. I was hoping Citi would pay up to gain full control. That obviously hasn't happened. I think Citi management is competent, so I'm holding my Nikko Cordial ADRs for now. I'll alert readers if that changes, of course.

Comments

[Moon]

SAM values it ~2000 yen, but the Citi purchase ~1700 yen is ~8% above your valuation (~1570 yen) when you bought in '05 (split adjusted, today's exchange rate).

You said you bought NIKOY on a liquidation basis, but under Citi mgmt you might hold? Do you have a new valuation under Citi? I do note that your previous 1/3rd sale was a lot higher (split adjusted, and adjusted for today's USD/JPY exchange rate). Is $16.30 your present valuation?

[John]

Moon: I always thought Nikko Cordial might be a takeover candidate (thinking Mizuho Financial might be the buyer). I think 1900 to 2000 yen per share is fair. I would have sold at $16 a share.