Third Nikko investor pressures Citi to raise offer
NEW YORK (Reuters) - Citigroup on Thursday came under more pressure to raise its $14 billion takeover bid for No. 3 Japanese securities firm Nikko Cordial when a third major Nikko shareholder placed a sell order for a big block of stock at a price above Citigroup's offer.
Southeastern Asset Management said it placed an order to sell 6.6 percent of Nikko's 8603.T shares at 1,900 yen per share, above Citigroup's (C.N) 1,700 yen per share tender offer.
Bermuda-based Orbis Investment Management and Chicago-based Harris Associates have already offered their respective 5.8 percent and 5 percent stakes in Nikko at 1,900 yen each.
Sell orders for other stakes in Nikko have also been placed at this higher price, meaning that at least 20 percent of Nikko stock has been offered at 1,900 yen in the last few days.
The shareholders hope to press Citigroup to sweeten its offer for Nikko a second time, after it raised its price from an initial 1,350 yen a share last month.
Some analysts have described the shareholders' attempts as largely symbolic since other sellers are offering the stock at a lower price.
However, one Citigroup investor said the shareholders may succeed in getting a higher price.
"I'm assuming that if Citigroup wants to get the deal done, they are going to have to raise their bid, which then becomes a horrible deal for Citi," said Citigroup shareholder William Smith, chief executive of SAM Advisors LLC.
"You've got shareholders who want more. Citi does not want to pay more, and I think as you get closer to a vote then the two sides may have to contract and meet somewhere."
Citigroup declined to comment.
OTHER BIDDERS?
Some Nikko shareholders who requested anonymity said that with more than 20 percent of the company's stock up for grabs, the brokerage could now attract interest from other possible bidders.
Before it began accepting tenders on March 16, Citigroup, the top U.S. bank, said it would not increase its bid a second time.
Citigroup already holds roughly 5 percent of Nikko and its tender closes on April 26.
Citigroup raised its original bid price after Nikko escaped a threatened delisting by the Tokyo Stock Exchange over an accounting scandal. Continued...
