GEA, Colombia’s largest economic group, is racing against the clock to counter hostile takeover

The Grupo Empresarial Antioqueño (GEA), the largest economic conglomerate in Colombia, faces a race against time, after the Gilinski Group put it in check with Public Acquisition Offers (OPA) on two of its main assets, which would lead it to lose the control of others.

The market failed to recover from the announcement on November 10 of a hostile offer by banker Jaime Gilinski together with the Abu Dhabi Royal Group on Nutresa for up to 62.625% of its shares, in a transaction of US $ 2,221 million, when the billionaire made his next move.

Almost three weeks later, Gilinski launched a takeover bid for up to 31.68% of the investment holding Grupo SURA, for up to US $ 1.19 billion according to Reuters calculations based on data from the stock market.

The GEA -which does not have a visible head- is made up of more than a hundred companies from all sectors, in a complex shareholding in which most of the companies are partners among themselves, standing out Grupo SURA, Nutresa, Grupo Argos , Bancolombia, Cementos Argos, Celsia and the pension fund Protección.

But that cross-participation that kept it protected from hostile takeovers since its inception in the late 1970s, is what Gilinski is taking advantage of to break into more than one of the conglomerate’s crown jewels.

The proposals led Grupo SURA and Grupo Argos to start the search for minority international partners, as well as to accelerate the listing on Wall Street of some assets of Cementos Argos and to consolidate their investments in road and airport concessions, energy and real estate rentals in a single vehicle to be listed on the NYSE.

Even market agents who requested anonymity did not rule out that Gilinski’s next move would include a takeover bid for Grupo Argos.

“We are in an extremely hostile scenario for the group as such in which the chances of maintaining that castling are lower,” said Laura Triana, analyst at the brokerage Actions and Values. “With this Gilinski limits enough the possibilities of Grupo SURA and Grupo Argos to cover themselves because they entered the GEA castling in two ways.”

Grupo SURA and Grupo Argos ruled out selling their 35.7% and 10% stake in Nutresa to Gilinski in the tender offer, considering that the offer is below a valuation of JP Morgan.

Spokesmen for Gilinski and the GEA companies involved said they would not comment during the tender offer period.

Analysts explained that although the rules allow counter offers to be made from side to side, the advantage would be in the hands of Gilinski due to the financial muscle he has, backed by Abu Dhabi, in addition to the short time.

“The rule says that majority shareholders can counter-offer, what happens is that the authorization of the Financial Superintendence of the OPA for Nutresa arrived so quickly that I do not know how quickly they can put together a strategy to counter-offer,” said independent analyst Daniel Escobar .

The takeover bid for Nutresa ended on December 17, but NUGIL – an investment vehicle of Gilinski and Royal Group – extended the acceptance period to January 12 to receive more acceptances.

Bancolombia, the objective?

On Thursday the notice of offer on Grupo SURA will be published, whose assets are around 72.6 billion pesos. The takeover bid would end on January 11.

Although analysts interpret Gilinski’s Nutresa and Grupo SURA offers as a buying opportunity at a time when Colombian stock prices are low, even more so after the coronavirus pandemic, they admit that the interest of the banker He has a pinch of revenge and tries to return to an asset his family had before: Bancolombia.

The Gilinski Group sold the former Banco de Colombia to the GEA in 1997 in an operation in which the former were dissatisfied with the payment process, which led to a civil action battle between the parties, which ceased in 2010 after arriving to a deal, but with open wounds.

Agents who have had conversations with members of the Gilinski Group during the takeover process admitted to Reuters on condition of anonymity that there is a perceived interest in returning to Bancolombia via the Grupo SURA takeover bid.

“When you listen to them, you can see that hostile tone, the tone that they go for everything,” said a stock broker who is receiving orders in the takeover bid for Nutresa. “Wherever Gilinski manages to buy, he joins the group and can go to Bancolombia later.”