Citi is going to sell its ownership interest in Nikko Asset Management (Nikko AM), to The Sumitomo Trust and Banking, as part of a transaction that values Nikko AM at $1.26 billion (at an exchange rate of ¥95.07 to $1.00).
Under the terms of the transaction, Citi will sell to Sumitomo Trust its entire 64% beneficial ownership interest in Nikko AM, including the beneficial ownership interest that it holds through Nikko Principal Investments, after certain deal-related expenses and adjustments. Sumitomo Trust is also expected to acquire the beneficial ownership interests in Nikko AM held by various minority investors in Nikko AM, bringing Sumitomo Trust’s total ownership stake in Nikko AM to about 98.5% at closing. The remaining 1.5% ownership interest will continue to be held by an employee stock ownership plan maintained on behalf of Nikko AM employees.
Vikram Pandit, CEO of Citi, said: “With the previously announced sales of our brokerage and trust banking businesses in Japan, this transaction marks another milestone in the implementation of our Citicorp/Citi Holdings strategy. We remain committed to Japan, where we have proudly served clients for more than a century. We can now shift our focus from reshaping our franchise in this very important market to building our core businesses and better serving clients.”
Douglas Peterson, CEO of Nikko Citi Holdings, commented: “This transaction positions our franchise to deliver Citi’s best global capabilities in Japan.”
Last month it has been reported that Mizuho Financial Group, Nomura Holdings, Sumitomo Mitsui Financial Group (SMFG), Sumitomo Trust & Banking, and T&D Holdings have reached the second round of bidding for Citi’s Japanese fund management division.
Citi’s Institutional Clients Group advised Citi on this transaction. The transaction is expected to close in the fourth calendar quarter of 2009, subject to regulatory approvals, and is not expected to have a material impact on Citi’s net income.
