Tokyo-Citigroup Inc. announced on Tuesday that it will acquire shares of Nikko Cordial Corp. by triangular merger through Citigroup Japan subsidiary.
Nikko Cordial Corp, Japanâ€™s third largest brokerage, will then become a wholly owned unit through a stock swap in a deal valued at $4.42B. It will mark first-ever triangular merger since the nation allowed triangular merger from May.
The U.S. mega-bank will obtain all the shares of Nikko Cordial Corp. Citigroup currently holds a 68.23 percent stake of Nikko.
After completion of triangular merger, Nikko Cordial will be delisted from the Tokyo, Osaka and Nagoya stock exchanges. Nikko admits its shares have been assigned to a supervisory post.
On Tuesday trading, Nikko shares rose 1.2 percent to 1,462 yen($12.2) on the Tokyo Stock Exchange(TSE) before the announcement was made.
It will become the first triangular merger in Japan. In this kind of merger, a foreign company makes use of a local subsidiary to acquire a Japanese company, exchanging the parent companyâ€™s shares into the buyout target companyâ€™s shares.
Citigroup is now on the way of applying to list its share on the TSE. As the nationâ€™s baby-boomers are close to retiring, the U.S, bank is strengthening its presence in Japan because there seem to be many older generations who are interested in their products.