Bloomberg News

Citigroup's Prince `Hopeful' of China Bid's Success (Update2)

February 01, 2006

(Corrects amount of bid in third paragraph.)

Citigroup Inc. (C:US) Chief Executive Officer Charles Prince said he's ``hopeful'' the company's bid to acquire a stake in China's Guangdong Development Bank will succeed.

``We have not been notified of anything on Guangdong,'' Prince said today at a Citigroup financial services conference in New York. ``We're very hopeful.''

Citigroup, the biggest U.S. bank, and its local partners bid 24.1 billion yuan ($3 billion) in December for an 85 percent stake in Guangdong, people involved with the talks have said.

The bank would be the first foreign investor to buy control of a state-run Chinese bank if its bid succeeds. France's Societe Generale and Ping An Insurance (Group) Co. of China had offered less for the Guangzhou-based lender, the people have said.

Prince, 56, was less optimistic that New York-based Citigroup would fold General Motors Corp.'s finance unit, General Motors Acceptance Corp., into its operations.

Recent press reports that suggest Citigroup and another group of investors may bid for a majority stake in GMAC are ``interesting,'' Prince said.

``If it were as described, it seems to me that would be a pretty interesting capital-markets transaction,'' Prince said. He also said he doesn't ``envision GMAC as an operating company of Citigroup.''

Negotiations

According to people familiar with the negotiations, Citigroup's private-equity arm has joined with Cerberus Capital Management LP in a group that may bid between $11 billion and $15 billion for GMAC.

The bidders for a 51 percent stake include another group headed by Wachovia Corp. and Kohlberg Kravis Roberts & Co., the people said. Timing for a possible agreement isn't set.

Prince said that, while he plans to boost revenue and profit by investing in existing businesses, he'd consider acquisitions that aren't a drag on earnings.

Deals involving large U.S. banks haven't happened in part because ``nobody wants to sell,'' he said. ``Everyone wants to buy something.''

Shares of New York-based Citigroup fell 25 cents to $46.33 at 4:02 p.m. in composite trading on the New York Stock Exchange.

To contact the reporter on this story: Justin Baer in New York at jbaer1@bloomberg.net.

To contact the editor responsible for this story: Erik Schatzker in New York at eschatzker@bloomberg.net.


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