Citigroup agrees ¥1 trillion Nikko deal

Citigroup has agreed to buy Nikko Cordial, the scandal-hit Japanese broker, for ¥1.3 trillion (€8.5bn) in its largest takeover of an Asian company.
 

The companies released a joint statement this morning which said they had "agreed to form a comprehensive strategic alliance".

The ¥1,350 per share deal, which includes the investment banking joint venture Nikko Citigroup, established in 1999, was signed today after agreement from both boards of directors.

The merged business will include retail banking, capital markets and corporate banking, asset management and principal investing. Citigroup is advising itself internally. Nikko's advisers were not named.

The statement said the offer would be launched next week even if Nikko's shares are delisted from the Tokyo Stock Exchange, over its recent accounting problems.

In December, Nikko had to restate its earnings for 2005, following an investigation by Japan's Securities and Exchange Surveillance Commission.

The Tokyo Stock Exchange said it would consider delisting the stock by as early as April after reviewing the restated figures.

Citigroup, which first opened an office in Japan in 1902, has also overcome recent problems in the country. In 2004, the US group lost its private banking license in Japan after it failed to prevent money laundering, prompting the dismissal of Deryck Maughan, its then chairman of Japan.

Later that year, group chief executive Chuck Prince flew to Japan to apologise for the bank's wrongdoing. Several months later it hired Howard Baker, former US ambassador to Japan, as a senior adviser to help rebuild its image.