A further two investment firms have dismissed Citigroup’s $10.8 billion buyout offer for Japanese brokerage Nikko Cordial Corp. as far too low, pressuring the U.S. bank to increase the offer.
Tennessee-based Southeastern Asset Management, Nikko’s third-biggest shareholder, said the brokerage was worth at least 48 percent more than the proposed offer.
Meanwhile, Orbis Investment Management, which says it owns 6.9 percent of Nikko, has also released a statement saying that its “internal analysis supported a valuation of 2,000 yen,” or $16.89 a share, and that Citigroup’s offer of 1,350 was “unacceptable”.
The statement brings to three the number of major shareholders that have rejected the Citigroup bid. Harris Associates, the biggest investor in Nikko, with a 7.5 percent stake, was the first to reject the offer.
If enough investors object to the deal, it could force Citigroup to raise the offer. Some analysts, though, said shareholders may choose to sell rather than risk Citigroup walking away at a time Nikko risks losing its stock listing over an accounting scandal.
“The only way they would raise the offer is if enough shareholders complain,” says Jon Fisher, senior portfolio manager at Fifth Third Asset management in Minneapolis. “Just because a couple of shareholders are squawking doesn’t mean they’ll get what they want.”