Land of the rising value?

2 October 2007 By Martin Hutchinson

The bank s acquisition of the rest of Japan s thirdlargest brokerage for a reasonable price gives it a unique position in Japanese finance. Chuck Prince wants to make 60% of Citi s revenues overseas. It needs to crack its losing streak in Japan if it wants to hit that goal.

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Citigroup Inc. is to purchase the 32% of Nikko Cordial it doesn't already own for $4bn, paying 1700 yen per share against a market price of 1462. The transaction is expected to close around January 2008. It intends to use its own shares for the purchase; this is the first use of a Japanese law passed in May that permits this. In 2006 Nikko Citigroup ranked second in Japan in advising on takeovers and third in underwriting stock sales. Citigroup had bid 1700 yen per share for 100% of Nikko earlier this year, but obtained only 61%, a stake later increased to 68%.

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