Citigroup to complete Nikko Cordial acquisition

Citigroup Inc. of the United States said Tuesday it will use a triangular merger to acquire the rest of brokerage Nikko Cordial Corp. by the end of January, turning it into a wholly owned subsidiary.

Announced at a joint news conference by the two firms, it is believed to be the first use of the new merger technique since it was introduced in Japan in May.

In a triangular merger, a Japanese subsidiary of a foreign company can acquire a Japanese company by swapping shares of the foreign parent for shares in the target firm. The acquisition does not require cash.

"The agreement which has been approved by the boards of directors of Citi and Nikko Cordial will strengthen the partnership between the two companies as we strive to realize our vision to create a leading comprehensive banking and security group in Japan," said Citigroup Japan Holdings Ltd. Chief Executive Officer Douglas Peterson.

Citigroup placed Nikko Cordial under its wing in May when it turned the nation's third-largest brokerage into a subsidiary by completing a public tender offer for the scandal-tainted brokerage.

Under the plan, Citigroup Japan Holdings Ltd., which is wholly owned by the U.S. financial giant, will use shares in the parent to acquire Nikko Cordial shares. Citigroup Japan currently owns 67.2 percent of Nikko Cordial.

Nikko Cordial will be delisted from the Tokyo, Nagoya and Osaka exchanges. The TSE said it will place Nikko Cordial on the supervision post for possible delisting effective immediately.