Larrea Bows Out After Citi Rejection in Banamex ‘Telenovela’
(Bloomberg) — Grupo Mexico SAB, the holding company of mining magnate German Larrea, said it accepted Citigroup Inc.’s decision to reject the U.S. bank’s $9.3 billion bid for the Grupo Financiero Banamex business.
“Grupo Mexico respects Citi’s determination and wishes success in the transaction it has chosen and the destiny it has chosen for Banamex,” the company said in a statement Friday, adding that it hoped the move “will result in stability and growth for the Mexican financial sector.”
Citi said on Thursday it would stick to its decision last month to sell a 25% stake to billionaire Fernando Chico Pardo as part of a plan to take the asset public. Grupo Mexico made a surprise offer late last week to buy all of Banamex.
Grupo Mexico said its offer was at a “superior price” that would “maximize the benefit to Citi shareholders” and “reposition Banamex as a leading Mexican bank that can provide a significant boost to our country’s economy.”
Larrea, who controls Latin America’s second-largest fortune after Carlos Slim, was at the forefront of purchasing Banamex in late 2022, but talks with Citi failed in 2023 due to the intervention of then-President Andres Manuel Lopez Obrador. Citi said Thursday it sees its deal with Chico Pardo as more certain.
Shares of Grupo Mexico rose nearly 2% in morning trading in Mexico City on Friday and rose for a fourth straight day as they rebounded from a more than 15% drop on Monday, the biggest drop since 2008. Larrea’s offer raised concerns about how the billionaire would allocate the nearly $9 billion held by Grupo Mexico.
Despite Friday’s gains, the stock was still down more than 8% for the week. The incident wiped out about $3.8 billion from Larrea’s family fortune as of 9 a.m. in Mexico City, according to the Bloomberg Billionaires Index. Larrea’s net worth reached an all-time high of $55.5 billion at the beginning of the week.
Analysts at Jefferies Financial Group Inc. said in a note that they would not rule out further attempts by Grupo Mexico to go after Banamex, saying the incident reflected Larrea’s “protracted and ultimately unsuccessful pursuit” of Mexican airport operator Grupo Aeroportuario del Pacifico.
Rodolfo Ramos, a strategist at Bradesco BBI, was also skeptical that Larrea had given up on finding a way to take a stake in Banamex or the banking sector.
“We have been talking about Grupo Mexico and Banamex for years, and Larrea has a clear appetite to enter the industry,” Ramos wrote. “While the chances are lower today than they were a week ago, we would be surprised if this was the end of the telenovela.”
–With help from Dylan Sloan.
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