Shinsei, Auzora and SMFG advance, but Kirin drops after Lion Nathan offer
Banking and brokerage stocks jumped in Tokyo afternoon trading Monday, even as the broad market retreated amid concerns over the swine flu pandemic, with shares of Shinsei Bank, Auzora Bank and Sumitomo Mitsui Financial Group spurred by hopes for industry consolidation.
Kirin Holdings stock declined modestly, however, after making an offer for the 54% stake it doesn't already hold in Australian alcoholic beverage maker Lion Nathan at a hefty premium to its last closing price in Sydney. See full story on Kirin deal to buy Lion Nathan.
Merger-and-acquisition activity dominated trading in financials, with Aozora Bank stock soaring 15.3% and Shinsei Bank rising 11.3% on reports the two were discussing a possible merger to create Japan's sixth-largest bank.
Both banks have foreign stakeholders and both are expected to post losses for the year ended March 31. Shares of Sumitomo Mitsui Financial Group gained 1.6%, following media reports that Japan's third largest bank had trumped larger rivals such as Mitsubishi UFJ Financial Group and Mizuho Financial Group to emerge as the largest bidder for Nikko Cordial Securities, Citigroup Inc.'s retail brokerage operations in Japan.
Sumitomo Mitsui offered about 500 billion yen ($5.2 billion) for the retail brokerage, the report said.
Shares of Mizuho added 1.7%, and Mitsubishi UFJ Other financials also gained, with Nomura Holdings ( advanced 3% in Tokyo.
Other financials also gained, with Nomura Holdings rising 1%. The gains came even though the brokerage, Japan's largest, reported Friday a record net loss of 709.4 billion yen ($7.3 billion) for the year ended March 31, hit by costs related to its own acquisition of some global operations of Lehman Brothers.
"We think the shares are well worth holding at current levels as a long-term investment, but see short-term upside potential as limited," Nikko Citigroup analyst Makoto Kasai wrote in a report.
Shares of Kirin meanwhile, fell 1.2% after the Japanese beverages major Monday offered to buy the remaining 54% stake in Lion Nathan for a cash consideration of 12.22 Australian dollars ($8.77) a share -- a 47% premium to Lion Nathan's closing price last week.
The offer valued Lion Nathan, in which Kirin already owns a 46% stake, at 8.2 billion Australian dollars. Lion Nathan's shares recently surged 40.2% to 11.65 Australian dollars in Sydney.
The broad advance in financials weren't enough to support the Nikkei 225 Average, with the benchmark reversing its morning gains. In early afternoon trading, the Nikkei was down 0.5% at 8,667.25, while the broader Topix Index fell 0.1% to 788.96.
Elsewhere in the region, Australia's S&P/ASX 200 was flat, China's Shanghai Composite fell 1.2%, South Korea's Kospi slipped 1.1% and Taiwan's Taiex gave up 2.7%, while Hong Kong's Hang Seng Index lost 2.9% to 14,823.2.
