Background on Grupo México and Banamex
Grupo México, one of Mexico’s largest corporations led by Germán Larrea, has announced that it will not substantially increase its debt if the recent offer for Banamex, a Mexican bank currently owned by Citigroup, is accepted. This assurance comes after a “black Monday” in the stock market, where the market fell by 15% following the announcement.
Grupo México’s Financial Position
In a statement sent to the Mexican Stock Exchange (BMV), Grupo México clarified that the proposed acquisition of Banamex would not require a significant increase in corporate debt. They explained that even if they were to acquire 100% of Banamex’s shares, the maximum credit required would be less than $2.0 billion, which they claim to have already secured through pre-arranged credit lines.
Grupo México further emphasized that they will continue with their investment projects in mining, transportation, and infrastructure divisions, regardless of the Banamex acquisition.
Ownership Structure Post-Acquisition
Grupo México clarified that their offer for 100% of Banamex’s shares, announced on October 3, includes retaining 60% of the investment value while inviting other Mexican private investors and AFORS (Voluntary Private Pension Funds) to acquire the remaining 40%.
They mentioned that they already have agreements with Mexican investors to cover this remaining percentage and may later conduct a Public Offering to include small and medium-sized investors, “democratizing and providing liquidity to capital.”
Timeline and Regulatory Considerations
Grupo México stated that they have given Citigroup a 10-day period to consult with its Board of Directors and principal shareholders, considering the regulatory authorities’ statements in the United States to fulfill their fiduciary responsibilities.
No Increase in Offer for 100% of Shares
Grupo México clarified that they would not increase their offer for 100% of Banamex’s shares, which already exceeds Citigroup’s announced 25% offer.
Leadership and Integration Plan
The acquisition aims to retain Banamex’s entire management team and establish a specialized executive committee to avoid any distractions from the three divisions currently part of Grupo México.
Grupo México’s Track Record
Grupo México highlighted their experience in high-value, long-term business ventures, demonstrating operational and financial discipline in developing investments. They prioritize strategies with adequate returns for their investors and shareholders, as evidenced by successful acquisitions like Buenavista del Cobre, Ferromex, SPCC’s mining assets in Peru, Asarco, and short-line railway lines in the United States.
Banamex’s History and Current Situation
In 2022, after Citigroup announced the sale of Banamex, there was an initial phase in the “bidding” for the bank. Several parties expressed interest, including Banorte, Banco Azteca, Inbursa, Santander, Mifel, and non-financial entities like Grupo México. However, as months passed, most parties withdrew their interest, leaving only a few contenders. Grupo México was among them but eventually stepped aside due to coyuntural factors.
In 2023, Citigroup revealed plans to sell Banamex through an Initial Public Offering (IPO) on the stock market, scheduled for late 2025 or early 2026.
Fernando Chico Pardo’s Involvement
On September 24, Citigroup announced an agreement with Mexican entrepreneur Fernando Chico Pardo to acquire 25% of Banamex, becoming the council president upon completion of the transaction.
The following day, bank executives stated that while other investors would be invited to participate, Chico Pardo would be the reference shareholder. Chico Pardo, a majority shareholder in Grupo ASUR and other businesses, declared that he did not intend to acquire more than the 25% of Banamex and outlined some goals for the bank.
Grupo México’s Acquisition Proposal
On October 3, Grupo México surprisingly announced their offer for 100% of Banamex in a statement to the BMV. The proposal aims to achieve two objectives: acquiring 100% of Banamex and ensuring a majority Mexican ownership.
They outlined the offer terms: 0.85x Book Value (VL) for 25% of the capital and 0.80x VL for the remaining 75%. If the Chico Pardo family decides to maintain their 25% investment with Citigroup, Grupo México would acquire the 75% at 0.80x VL, respecting minority shareholder rights.
Citigroup stated that, as of the announcement, they had not received a proposal from Grupo México. However, if presented, they would review it. They emphasized that their preferred path remains the previously announced agreement with Chico Pardo and the planned IPO.
