TOKYO (AFP) - Citigroup announced Tuesday a 10.7-billion-dollar takeover bid for Japan's scandal-hit brokerage firm Nikko Cordial, aiming to rebuild its presence in the world's second largest economy. The US banking giant, which has held a stake in Nikko since 1998, plans a tender offer within a week for Japan's number three securities firm, which looks likely to be stripped of its stock market listing for false accounting. The boards of the two companies have approved a deal for Citigroup to acquire a majority stake in Nikko Cordial as part of a wider tie-up, the two companies announced. "This demonstrates Citigroup's continued commitment to Japan, consistent with our overall strategy to grow our international franchise," Douglas Peterson, chief executive of Citibank Japan, told a press conference. "I'm very confident because there is a compelling reason for Nikko Cordial and Citigroup to form this partnership. We already have been together for over eight years for the successful joint venture in investment banking and we have complementary businesses," he added. The deal marks a renewed expansion by Citigroup in Japan after a difficult few years here including a series of retreats. In January it announced a major scaling down of its consumer finance business. In 2004 Citigroup ousted three top executives after Japan's regulators ordered it to close its private banking operations here for violating banking laws. Citigroup, which was overtaken in 2005 as the world's largest bank by newly created Japanese mega-bank Mitsubishi UFJ Financial Group, used to own 21 percent of Nikko Cordial but has gradually cut its stake to 4.9 percent. If Citigroup purchases all the Nikko Cordial outstanding shares not already owned by the US bank and its affiliates, then the total purchase would be about 1.25 trillion yen (10.7 billion dollars). Nikko Cordial, Japan's third-largest securities broker, admitted last December to having falsified its financial statements for the fiscal years that ended in March 2005 and March 2006, inflating its profits by 21 billion yen. Japan's financial authority imposed its largest-ever fine of 500 million yen on Nikko Cordial in early January for issuing the false earnings report. "We believe the partnership will be effective for recovering our lost credibility," said Nikko Cordial Corp. president Shoji Kuwashima. "We wanted to protect investors and shareholders who were worried about the problems," he added. Nikko Cordial shares closed with sharp gains of 161 yen or 13.7 percent to 1,340 on reports that of the deal earlier. Citigroup will offer 1,350 yen for each Nikko Cordial share. The Tokyo Stock Exchange is expected to decide this month whether to delist Nikko Cordial due to the scandal but Citigroup said that the tender offer would go ahead even if the firm loses its listing. A panel of outside experts tapped by Nikko reported in January that former executives had been "actively involved" in the systematic violation of laws and had inflated profits for the year to March 2005. Nikko Cordial announced a 3.1-billion-yen lawsuit last month against former president Junichi Arimura and two other former top managers accused of accounting fraud.
Copyright 2008, by
AFP
. All rights reserved
Microsoft goes for Google in global copyright...
Global shares rally as Paulson salutes Asian... 