Mizuho Financial Group (MFG +2.20%) announced a pricey deal to increase its equity stake in a peer this week, but this didn't impress investors very much. As a result, this week Mizuho's share price took a nearly 10% hit, according to data compiled by S&P Global Market Intelligence.
Mizuho will gain 51% of Rakuten Securities
On Thursday, Mizuho officially and categorically denied a media report that it was boosting its investment in that peer, Rakuten (RKUNY +2.10%) Securities (a subsidiary of the near-namesake Japanese e-commerce company).
It's a bit questionable why Mizuho bothered, because later that same day it admitted that it had, in fact, made such a move. It said that it has agreed to purchase slightly over 29% of Rakuten Securities' common stock from an entity related to that company, Rakuten Securities Holdings. This will boost Mizuho's Rakuten Securities stake to 49%, with Rakuten Securities Holdings owning the remainder.
All told, the deal is worth 87 billion yen ($576 million), Mizuho said. It will be effected in a share transfer between the two counterparties.
Referring to its current partnership, Mizuho stated in a press release that "By strengthening the Alliance, we will promote initiatives, including collaboration between both groups, aimed at building a new retail business model that combines both online and offline businesses in the fields of asset formation and asset management."
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A quick close
The Mizuho/Rakuten deal is subject to approval from the relevant regulatory bodies, but the two companies clearly expect this to occur quickly. The arrangement is anticipated to be finalized this coming Dec. 15.
