Citigroup get Nikko controlling stake

27 April 2007

Citigroup has completed an all-cash acquisition deal for Japanese brokerage Nikko Cordial, which has been dogged by scandal recently.

The $7.7 billion (£3.85 billion) agreement was reached after Citigroup increased its stake in Nikko, Japan's third largest brokerage, from 4.9 per cent to 61.1 per cent through a tender offer to buy shareholders' outstanding stock.

The biggest acquisition deal ever agreed by a foreign firm in Japan, the purchase will see Citigroup pay 1,700 yen ($14.24) for outstanding stock, having raised its offer price by 26 per cent last month in response to initial shareholder opposition.

Nikko Cordial, which has more than 100 branches across Japan, was recently fined 500 million yen over allegations that it falsified financial statements.

Commenting on the deal, Citibank Japan chief executive, Douglas Peterson, told a press conference that Japan is a "priority market" and the company hopes the financial sector will become more competitive.

Japan has recently witnessed a number of key mergers and acquisition deals with foreign companies over the past months, as the country opens up its markets to greater overseas competition.

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