April 4 (Bloomberg) -- Nikko Cordial Corp.'s international shareholders stepped up pressure on Citigroup Inc. to raise a $13.4 billion takeover bid by offering to sell their shares at a higher price than the U.S. bank is paying.

Harris Associates LP joined Orbis Investment Management Ltd. in offering shares of Japan's third-largest brokerage at 1,900 yen ($16), above Citigroup's 1,700 yen bid. Investors placed sell orders for 137 million shares, 14 percent of the total, at that price as of 3 p.m. in Tokyo, according to Instinet Japan Ltd.

Shareholders led by Orbis are using the tactic to signal the strength of opposition to the offer and may be seeking to lure a rival bidder. Citigroup rebuffed their earlier demands for more money. Nikko shares closed at 1,697 yen in Tokyo, below the bid price, indicating a higher offer may be unlikely.

``It's a bargaining technique which is unprecedented and very political,'' said Masaki Iso, who oversees about $7.3 billion as head of Japanese equities at Yasuda Asset Management Co. in Tokyo. ``The risk is that Citigroup will cancel the offer, which may hurt Nikko's share price.''

Nikko shares rose 0.5 percent today, the biggest gain in three weeks. Tokyo exchange rules state that the number of buy orders must match sell offers before trading. The orders placed at 1,900 yen won't be traded unless a buyer appears at that price. Citigroup fell 5 cents, or 0.1 percent, to $51.36 in New York Stock Exchange composite trading.

Citigroup raised its offer from 1,350 yen on March 13, after Nikko escaped a stock market delisting over an accounting scandal. It has ruled out another increase.

`Open Format'

Orbis yesterday placed sell orders for all its 56.5 million shares on the Tokyo Stock exchange at 1,900 yen and suggested other investors follow suit. The bourse doesn't disclose who makes buy and sell orders.

Chicago-based Harris, which owned 6 percent of Nikko as of March 20, will put all of its remaining shares up for sale at 1,900 yen, fund manager David Herro said in an e-mailed response to questions. Harris was the first major investor to reject Citigroup's offer, saying the shares are worth 2,000 yen.

The sell orders of other shareholders who imitate Orbis's move ``will be visible to the market in the order book of the Tokyo Stock Exchange,'' Bermuda-based Orbis, which owns 5.8 percent of Nikko, said in a statement on April 2. ``This open format permits the marketplace to decide what the shares are worth.''

Rockhampton Management (Hong Kong) Ltd. said yesterday it ``echoes the sentiments expressed recently by Orbis'' and will place a sell order for all its Nikko stock at 1,900 yen. The fund holds more than 10 million shares, portfolio manager Chris Donegan said in an interview, declining to specify further.

Majority Sought

Citigroup owns 4.9 percent of the company and has said the offer is conditional on winning at least a majority. Mizuho Financial Group Inc., which holds 4.8 percent, last month said it will tender its shares. Nikko's board supports the takeover.

Southeastern Asset Management Inc. of Memphis, Tennessee and Mackenzie Financial Corp. of Toronto have also said Citigroup's latest bid is too low. Together, the four institutions control almost a quarter of Nikko.

The new tactic may also be a way of signaling to Citigroup what it would take to push the deal through.

``It will be an incentive for Citigroup to raise the offer as it can monitor how many shareholders will be willing to sell at 1,900 yen,'' said Hisakazu Amano, who helps oversee about $16 billion at T&D Asset Management Co. in Tokyo, including Nikko shares.

To contact the reporter on this story: Takahiko Hyuga in Tokyo at thyuga@bloomberg.net

Last Updated: April 4, 2007 16:29 EDT