Sunday, March 3, 2024

La Jornada reports Citibanamex sale appears imminent

Grupo México has formally purchased Citibanamex, the newspaper La Jornada reported on Friday. 

While the alleged sale has not been made public, Grupo México’s offer is estimated to be between US $7 billion and US $7.3 billion, according to La Jornada. The financial newspaper El Financiero reported the sum to be US $7.1 billion. 

A powerplant operated by Grupo Mexico
Grupo México operates across a diverse range of industries including this power plant in Sonora. They are the fourth largest company in Mexico. (Grupo México)

Grupo México secured US $5 billion in financing for the purchase in February, thanks to a syndicated loan from HSBC, Barclays, JP Morgan and other financial institutions. This figure is about US $1 billion more than the offer made in October 2022. 

The company, owned by billionaire businessman Germán Larrea, is the seventh largest private company in Mexico and has interests in mining, transportation, infrastructure and entertainment, including the Cinemex cinema chain. 

Insider sources told the newspaper La Jornada that Grupo México is considered the strongest option to purchase Citibanamex, although both the company and Citibanamex declined to make a formal comment. Several other companies initially showed interest in the purchase, including Banorte, Santander, Inbursa and Grupo Salinas, all of which have since withdrawn their offers. 

Daniel Becker Feldman, a banker with Grupo Financiero Mifel, has also shown interest and has yet to formally withdraw. 

Only two buyers plan to submit bids for Citibanamex, which Citi Group hopes to sell.
Citigroup announced its intention to exit the Mexican market early in 2022. While it had been hoped that the deal would already be complete, the intricacy of the sale has meant that the bank has taken longer to sell than originally anticipated. (Citibanamex)

On April 25 in New York, Jane Fraser, the CEO of Citigroup, stated that the sale of Citibanamex had taken longer than expected, emphasizing the complexity of the operation. She explained that there were two options for the transaction: a sale to an individual group, or a public offering in the stock market, where multiple investors would be involved. 

“We are going to be very committed, as always, to taking the path that best suits the shareholders,” she said. 

Anonymous sources quoted by La Jornada claimed that “the strongest option is the individual buyer; that’s where the process is headed.” 

With the purchase, Grupo México will own around 80% of the bank’s capital stock, while the remaining 20% will be held for no more than two years before becoming a public offering.

Citi announced the planned sale of Citibanamex in January of 2022 as part of a “strategic refresh” of the company. Following the announcement, President López Obrador said that he would prefer the buyer be Mexican and that the bank’s extensive cultural holdings remain in Mexico. Citibanamex, under different names, has more than 135 years of banking history in Mexico. 

The president has already been informed that the sale appears to be closing in favor of Larrea, La Jornada said. 

With reports from La Jornada and El Financiero

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