Colombian operators bet on Gilinski’s next target

Jaime Gilinski rocked Colombia’s capital markets with US $ 3.4 billion in offers for the country’s largest food producer and one of its largest financial firms. Now, investors trying to figure out the billionaire’s next target believe they have found the answer: a conglomerate with stakes in cement, energy and infrastructure.

Grupo Argos shares have risen nearly 25% since Gilinski made the first of its purchase offers in mid-November, a US $ 2.2 billion offer to food producer Grupo Nutresa with a 38% premium over price. in which the shares were traded. Since then, it has been targeting the financial holding Grupo Sura with an offer of up to US $ 1.2 billion, 27% above the current price.

Investors believe that an Argos purchase offer would be the next logical step for Gilinski, whose estimated net worth of $ 4.3 billion makes him one of the richest men in Colombia.

In fact, Gilinski and his son Gabriel are poised to bid for a stake in Argos that could be worth up to $ 2 billion, according to a person with knowledge of their strategy. Such an offer depends on ongoing negotiations and Argos’ response to the offers for Sura and Nutresa, the person said.

Nutresa, Sura and Argos are part of an influential Medellín-based business association called Grupo Empresarial Antioqueño, or GEA. Members have stakes in each other’s companies, an arrangement they developed expressly decades ago to prevent takeover attempts by third parties. It seems that Gilinski is trying to break that line of defense.

“Who is next in line? All eyes point to Grupo Argos”Wrote Daniel Guardiola, an analyst at BTG Pactual, in a note. “The cross-participation structure of the three groups creates a complex network of interrelated interests”.

A representative for Gilinski did not respond to messages seeking comment. A spokesperson for Argos – which controls the second largest cement company in the United States and also operates power producers, airports and concessions in Latin America – declined to comment on the possibility of an offer from Gilinski.

If he succeeds, Gilinski, a Harvard Business School graduate with banking interests in Latin America and Europe, would effectively break down the GEA’s barriers. Combined, Nutresa, Sura, Argos and their affiliates represent approximately half of Colombia’s Colcap benchmark stock index.

“This transaction puts at risk the control structure of one of the most relevant groups in the country”Said Luis Ramos, LarrainVial equity analyst. “These operations fuel questions about the shareholding structures of these companies and their ability to generate value for minority shareholders.”.

Meeting of Argos

Gilinski’s possible offer for a stake in Argos may hinge on decisions made by shareholders at a meeting on Friday, specifically whether there are indications that investors will seek to raise funds to make a counter offer for Nutresa or Sura.

A public offering by Gilinski would effectively block Argos and prevent officials from making changes to its capital structure, the person said. Gilinski would partner with Royal Group of Abu Dhabi in a possible bid for ArgosAccording to the person, who asked not to be identified because the negotiations are private. Royal Group also supports its offering by Nursery.

“Gilinski’s offer for Grupo Sura leaves GEA with very few defenses”Said Luis Carlos Bravo, finance professor at the Colombian business school INALDE. “The only option they have is to find a white knight to come and make a counter offer.”.

On Wednesday, Argos said he has “serious concerns”On Gilinski’s offer for Sura, in which it has a 27.7% stake. He highlighted “the uncertainty, doubts and blockages generated by two simultaneous takeover bids from the same bidder against which the medium and long-term strategic purpose and purpose have not been clearly expressed”According to a statement.

Sura said in a regulatory statement that his board, along with external advisers, is evaluating Gilinski’s offer, which still needs regulatory approval.

This approval is likely to come later this month, according to the person familiar with the offer. The public offering process could potentially close in January, the person said.