Citigroup to sell Nikko Asset to Sumitomo Trust for $1.26 billion

Citigroup today announced that it would sell its entire ownership interest in Nikko Asset Management, one of Japan's leading asset management companies, to The Sumitomo Trust and Banking Co (STB) for $1.26 billion.

New York-based Citigroup will sell its 64-per cent stake in Nikko Asset Management as the bank continues to divest assets to restructure and pay back the $45 billion bailout money given by the US government.

Citigroup said that out of the $1.26 billion it will receive from the sale, it will actually get $795 million after certain deal-related expenses and adjustments are taken into account.

The price, however, is far below the $13 billion Citigroup paid for its acquisition in March 2007. (See: Citi makes final $14 billion offer for Nikko)

Tokyo-based Sumitomo Trust will 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 per cent. The remaining 1.5 per cent ownership interest will continue to be held by an employee stock ownership plan maintained on behalf of Nikko AM employees.

STB Group is one of Japan's largest financial institutions with approximately $285 billion in assets under management (AUM) as of end of March 2009, will increase the group's total AUM to a little over $357 billion, creating one of Japan's largest asset management group.