Bloomberg has reported that Harris Associates, which owns about 7.5 per cent of the troubled Japanese bank Nikko Cordial, has dismissed Citigroup’s proposed take-over of the firm. David Herro, chief investment officer at Harris Associates, has apparently said the $10.8 billion offer for Japan’s third-largest brokerageworth $11.60 per sharewas too low.
“It’s worth substantially more than that,” says Herro. “We welcome Citigroup’s involvement but certainly not at that price.”
Analysts quoted by Reuters, however, have suggested that the offer looked good enough to convince investors.
“We consider [Citigroup’s offer] fair for shareholders because the stock could have declined sharply if Citigroup had not come up with the offer and the TSW decided to delist the stock,” says JP Morgan analyst Natsumu Tsujino.
Shares of Nikko plummeted 28 per cent in two days after the Tokyo Stock Exchange said Jan. 30 that it might remove the stock. The shares have since climbed 20 per cent on speculation Nikko would be acquired.
Citigroup says its offer is conditional on getting at least 50.1 per cent of Nikko’s stock. If accepted, the deal would give Citigroup control of 100 retail branches and about $250 billion of assets.