Citigroup offer too low, says Nikko's top investor

TOKYO - NIKKO Cordial Corp's biggest shareholder, Harris Associates, dismissed Citigroup's US$10.8 billion (S$16.5 billion) bid for Japan's third-largest brokerage as too low.

Harris Associates, which owns about 7.5 per cent of Nikko, will not accept Citigroup's offer of 1,350 yen a share, Mr David Herro, chief investment officer of international equities at the US$75 billion fund, said.

'It's worth substantially more than that,' said Mr Herro in an interview, adding that Nikko is worth at least 2,000 yen a share. 'We welcome Citigroup's involvement but certainly not at that price.'

Citigroup said on Tuesday that its offer is conditional on getting at least 50.1 per cent of Nikko stock. It may have to raise the price to draw overseas investors, which control about 55 per cent of the company. Nikko's four biggest shareholders are foreign institutions, according to Bloomberg data.

Nikko shares closed 1.27 per cent higher yesterday at 1,357 yen, above Citigroup's offer price.

Nikko's four top shareholders - Harris, Bermuda-based Orbis Investment Management, Southeastern Asset Management and Mackenzie Financial Corp - control about 26 per cent of Nikko, Bloomberg calculations show. Citigroup, whose 4.9 per cent stake makes it Nikko's fifth-largest shareholder, said it is seeking as much as all of the stock. It needs acceptances from owners of at least 45.2 per cent of the shares to win a majority.

BLOOMBERG NEWS