Mexico’s Banorte withdraws from bidding for Citi Banamex retail arm by Stocksak

© Stocksak. FILE PHOTO – Grupo Financiero is pictured at its headquarters, Mexico City, Mexico, on August 10, 2017. REUTERS/Ginnette Riquelme

By Valentine Hilaire

MEXICO CITY – Grupo Financiero de Banorte, Mexico’s financial services company, announced on Friday that it had pulled its support from the bidding process. Citigroup (NYSE: )’s Banamex local retail arm, leaving only a few potential buyers in the race.

Banorte declined to explain the reason for its withdrawal, despite having previously spoken out about its interest in Banamex.

Andres Manuel Lopez Obrador, Mexican President, said Friday that at least three bidders were still in the race.

Lopez Obrador said that he wants Banamex (which could be sold for $7 billion to $12 million) to be purchased by a Mexican buyer.

Inbursa Mexican bank, owned by Carlos Slim, is interested in buying Banamex at the right cost. Analysts consider it a top contender.

According to media reports, German Larrea, a mining tycoon and president of Banca Mifel, is also preparing his own bids.

Becker, Larrea and Slim spokespeople who declined to comment.

Citibanamex stated in a statement that it is in constant communication with potential buyers and “remains dedicated to pursuing any route which maximizes value for their shareholders.”

Ernesto Torres Cantu from Citigroup Latin America has previously stated that the company expects to conclude a deal to sell Banamex before January 2023.

Citi had indicated in February that it could also offer the bank for sale through an initial public offerings (IPO). Analysts have confirmed that this option is still possible.

“Citi could do a IPO for a percentage Citibanamex, redistributing the remaining stake to Citigroup shareholders, just like Itau did with XP (NASDAQ :),” a senior Market Analyst told Stocksak), or it could perform a series on follow-on offerings.”

Carlos Gonzalez, a Monex analyst, told Stocksak that Larrea’s Grupo Mexico seemed like a good candidate. While Mifel and its investors might not be able afford the high price, Slim’s group may not want to pay it.

He said that the lack of potential buyers could be a problem: “The problem it that there are not many bidders, so that they will probably have sell it in an Auction-type public offering.”

Banorte’s withdrawal from the race follows similar withdrawals made by Ricardo Salinas Pliego, a Spanish media tycoon, and Spanish bank Santander earlier in the year.

Analysts from Barclays (LON.) Banorte said that the decision was a positive one because it provided a “key assurance” it wouldn’t engage in aggressive transactions.

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Stocksak Editorial

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