• Kyodo News


Major Japanese banks will give Citigroup Inc. a 1.7 trillion yen line of credit, sources said Friday, as the U.S. financial conglomerate makes a bid to acquire Nikko Cordial Corp.

The syndicated loan by the banks, including Mizuho Corporate Bank, Bank of Tokyo-Mitsubishi UFJ and Sumitomo Mitsui Banking Corp., will be the biggest ever offered here, topping the 1.28 trillion yen for Internet firm Softbank Corp.’s acquisition of Vodafone Group PLC’s Japanese operations last year.

The cash-flush U.S. group appears to be trying to sidestep any criticism it might face as a foreign bank buying a Japanese brokerage by strengthening its relationships with Japanese banks through taking a syndicated loan from them, the sources said. Citigroup launched a friendly tender offer for Nikko Cordial on March 15 in the hope of making the scandal-tainted No. 3 Japanese brokerage a wholly owned subsidiary. The offer will last until April 26.

The lenders, joined by foreign financial institutions, will finalize the line of credit later this month, the sources said. It will be for one year and can be extended for another year.

Citigroup is believed to be rich in cash and have little need to borrow for the Nikko acquisition.

Stock tops offer price

Nikko Cordial Corp.’s share price topped Citigroup Inc.’s tender offer price of 1,700 yen per share Friday for the first time since the U.S. financial conglomerate launched its offer for Japan’s third-largest brokerage on March 15.

The price rose to 1,720 yen before closing Friday at 1,715 yen on the Tokyo Stock Exchange, up 15 yen from the previous day, indicating speculative buying as four major foreign shareholders in Nikko Cordial have been calling for a higher tender price.

The share price rise could affect Citigroup’s tender offer running through April 26, a market source said.

Among major Japanese shareholders in Nikko Cordial, Mizuho Corporate Bank, which has a 5 percent stake in the brokerage, has indicated its acceptance of the tender offer. Others, including Dai-ichi Mutual Life Insurance Co., are expected to follow suit.

But the four foreign investment funds, which owned a quarter of total outstanding Nikko Cordial shares at the end of March, are increasing pressure on Citigroup to raise its tender offer price.

Earlier this week, Bermuda-based Orbis Investment Management (BVI) Ltd., which held a 6.9 percent stake in Nikko Cordial at the end of March, complained that the tender offer price is undervalued and threatened to offer Nikko Cordial shares at 1,900 yen per share on the TSE.

U.S. investment firm Southeastern Asset Management, which owned more than 6 percent of Nikko Cordial at the end of last month, has said each share is worth 2,000 yen.

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