TOKYO (Bloomberg) <\m> Nikko Cordial Corp.’s largest shareholder, Harris Associates LP, rejected a sweetened $13.4 billion takeover offer from Citigroup Inc. as too low.Harris, which owns about 7.5 percent in Nikko, has no plan “at this stage,” to accept Citigroup’s bid of 1,700 yen ($14.47) per share, David Herro, chief investment officer at the Chicago-based fund, said in a telephone interview. Nikko is worth at least 2,000 yen a share, he said.

Opposition from Harris may complicate Citigroup chief executive Charles Prince’s plan to sell services such as wealth management in the world’s second-largest economy. The Tokyo Stock Exchange this month decided against delisting Nikko over an accounting fraud, forcing Citigroup to give in to investor demands for a better price and raise the offer by 26 percent.

“Harris’s decision as the major shareholder may impact what other investors do,” said Yuri Yoshida, a Tokyo-based analyst at Standard & Poor’s, which is reviewing Nikko’s credit ratings for a possible upgrade. “We are monitoring closely whether this tender offer succeeds.”

Citigroup on March 13 raised its offer for Tokyo-based Nikko from 1,350 yen a share. Mizuho Financial Group Inc., which owns 4.8 percent of Nikko, accepted the higher bid this week. Buying Nikko would give the New-York based bank more than 100 branches in Japan and an additional 30 trillion yen of clients’ assets.

Shares in Nikko advanced 0.4 percent to 1,682 yen in Tokyo.

Bermuda-based Orbis Investment Management Ltd., Southeastern Asset Management Inc. of Memphis, Tennessee, and Toronto-based Mackenzie Financial Corp., which hold about 20 percent of Nikko, also turned down Citigroup’s initial offer.

The funds haven’t publicly disclosed whether they support the higher bid, which is open until April 26. Citigroup owns 4.9 percent of Nikko and needs another 45.2 percent to reach its goal of gaining a majority of the shares.

“We are not going to tender at this time,” Herro said. “We think a fair price is above 2,000 yen given that Citigroup is going to be managing it and Nikko avoided delisting.”

Citigroup is “confident” the offer will succeed and won’t increase it further, Japan CEO Douglas Peterson said last week.

The revised offer values Nikko at about 2.04 times book value, from 1.62 times for the first bid. Nomura Holdings Inc., Japan’s biggest brokerage, has a price-to-book ratio of 2.27 and Citigroup trades at 2.15 times book value.

Revelations that former Nikko executives inflated profit in 2004 left the company in disarray and gave Citigroup an opportunity to jumpstart its Japan expansion by buying Nikko. The two companies already have a venture in Tokyo for share sales and providing mergers advice.

Japan’s Securities and Exchange Surveillance Commission on Dec. 18 said Nikko overstated profit in documents related to a corporate bond sale in November 2005. Since then, six top executives have left the company and Nikko has sued three of them.