Tuesday, March 6, 2007

Nintendo Secondary Offering Price of 30,478 Yen Should Provide Support

The secondary offering of the 1.987 million shares of Nintendo stock owned by the Banks' Shareholdings Purchase Corp was priced at 30,478 yen on Tuesday, March 6th after the Tokyo Stock Exchange closed. The offering price represented a 2.47% discount from the Tuesday's closing price of Nintendo which was 31,250 yen. Brokerage firms in the syndicate selling these shares include Nomura Securities, Nikko Citigroup, Shinko Securities, Mitsubishi UFJ Securities and Daiwa Securities SMBC.

Given the large number of non-Nintendo shares that must be liquidated going forward by the Banks Shareholdings Purchase Corp, there is considerable pressure on member firms in the selling group to make this offering a success. A successful offering will go a long way toward insuring that these brokerage firms will be included in future sales.
It would be embarrassing to the Japanese government if the price of Nintendo dropped below the offering price. In that event, a wave of public criticism would surely be leveled at government officials for allowing the Banks entity to dump shares on unwitting purchasers.

Accordingly, the pressure on brokerage firms and the Banks Shareholdings entity for a successful sale strongly suggests that the Nintendo secondary will be over-subscribed, the price will rise above the offering price, and 30,478 will become a floor under which Nintendo will not trade in the immediate future.

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