Mexico City — Mexican mining and transportation giant Grupo Mexico on Friday submitted an offer to purchase Citi’s retail unit in the country, known as Banamex, more than two years after it had scrapped previous plans to do so.
Grupo Mexico, controlled by German Larrea, one of the nation's wealthiest men, said in a filing that the bid showed its “unwavering confidence” in the country and that such a purchase would once again make Banamex competitive among its peers.
Citi said in a statement it had not yet received the offer, but that a previous deal to sell a 25% stake in Banamex to local billionaire Fernando Chico Pardo and list the rest was still its preferred outcome.
Under its offer, Grupo Mexico would purchase 25% of Banamex at 0.85 times book value, and the remaining 75% at 0.80 times book value, it said.
Citi paid $12.5bn for Banamex in 2001.
The offer from Grupo Mexico comes a week after Chico Pardo, who chairs airport operator ASUR, tied up a deal for a 25% stake at 0.80 times book value, or about $2.3bn.
Analysts speculated at the time that by Citi accepting a deal below book value, it would effectively create a “floor” for a planned initial public offering (IPO) for the rest of the firm.
Outright buyers
Citi had previously sought outright buyers for Banamex, with Grupo Mexico coming the closest to sealing the deal.
However, talks dissolved in 2023 after tensions with the administration of then president Andres Manuel Lopez Obrador led the two sides to abandon an agreement.
Lopez Obrador had demanded the firm remain in Mexican hands and that the new owner not be allowed to cut costs through layoffs.
Chico Pardo said last week that President Claudia Sheinbaum had not put such conditions on his purchase.
Grupo Mexico said in the filing on Friday that safeguarding Banamex’s workforce would be among its priorities.
Stake
After the original Grupo Mexico deal fell through, Citi opted to pursue an IPO for Banamex. That was still on the table after Chico Pardo bought in, executives said last week.
Grupo Mexico’s bid would do away with the need for that.
Grupo Mexico said that while it intended to purchase the whole firm, if Chico Pardo wished to maintain his stake, Grupo Mexico’s bid would be reduced to 75% of the firm at 0.80 times book value.
More Mexican investors and pension funds could join in the future, Grupo Mexico said.
Citi said the previous plan was still on track, though it added the company was “committed to realising the full value of Banamex for (its) shareholders.”
“If an offer is presented by Grupo Mexico, we will of course review it in a responsible manner and consider, among other risk factors, the ability to obtain required regulatory approvals and the certainty of closing a proposed transaction,” Citi said.
Reuters
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