Analysis – Colombian conglomerate GEA could be cornered by hostile Gilinski

GEA – a sprawling group of more than 100 companies, many of which have significant stakes in each other – has so far been faced with two takeover bids led by Grupo Gilinski.

The setback with banker Jaime Gilinski – one of Colombia’s richest men and owner of GNB Sudameris, among many other companies – shakes GEA’s previously silent conglomerate of closely interlocking holdings, a deal that had it until now. recently protected from redemption attempts.

GEA brings together many of the most important companies in Colombia, including food producer Nutresa, industrial conglomerate Grupo Argos, bank Bancolombia, cement producer Cementos Argos, energy producer Celsia and pension fund Proteccion.

The investment holding company Grupo SURA, which owns 20-50% of the shares of many of GEA’s other companies, is the jewel in its crown.

Gilinski launched a takeover bid in November for up to 62.625% of the shares of Nutresa, a purchase worth around $ 2.2 billion, with backing from the Royal Abu Dhabi Group.

Gilinski, who gave few interviews, told local media he thought the company was just a good investment.

Royal Group, an investment firm chaired by UAE national security adviser Tahnoon Bin Zayed Al Nahyan, will own 49.9% of the shares purchased under the offer, while Gilinski will control the rest.

Nutresa’s offering was unprecedented in the Colombian market, both for its size and in an attempt to move onto the giant GEA. It was extended until January 12.

The market was further shocked three weeks later when Gilinski made another bid for up to 31.68% of Grupo SURA, at a cost of up to $ 1.19 billion, according to Reuters calculations from stock market data. .

Argos and SURA have both ruled out the sale of their holdings in Nutresa to Gilinski.

After the offer was announced, they said they would seek out international minority partners and viewed Gilinski’s offers – especially for Nutresa – as below market value.

“It is a very hostile scenario for the group (GEA),” said Laura Triana, analyst at Acciones y Valores brokerage. “In this way, Gilinski really limits the possibilities for Grupo SURA and Grupo Argos to cover themselves as he comes from two fronts.”

Gilinski will own all the shares purchased under the Grupo SURA offer, which is aided by funding from First Bank of Abu Dhabi, according to the official announcement of the offer released Thursday.

IHC Capital Holding LLC, also controlled by Al Nahyan, has signed a letter of intent with Gilinski to potentially act as a capital partner in its stake in Grupo SURA in the future, pending regulatory approval, according to the document. .

The SURA offer will take place between December 24 and January 11.

Although major shareholders as well as other members of GEA may make counter-offers – especially if they are successful in raising funds from international partners – time is running out and Gilinski’s financial might is stronger thanks to his support from Royal Group, analysts told Reuters.

“The financial regulator’s clearance of Nutresa’s initial public offering came so quickly that I’m not sure how quickly a counter-offer strategy can be crafted,” independent analyst Daniel Escobar said. .

Nutresa’s share price has risen nearly 30% since Gilinski announced the takeover offer, but it is still below the $ 7.71 per share he is offering.

Many in the market say Gilinski undervalues ​​Nutresa and SURA, criticisms also leveled by SURA and Argos, which cited independent ratings by major banks.

“Gilinski doesn’t pay a control premium, it’s almost a fair share price, and in these hostile buy operations the prices are normally higher,” Escobar said.

Trading in Grupo SURA shares has been suspended pending the official announcement of the offer, but will resume on Friday.

Gilinski’s son, Gabriel, told Reuters he could only comment after the public offerings were over. Spokesmen for Grupo SURA, Grupo Argos and Nutresa declined to comment.

Argos also said he would accelerate efforts to consolidate several investments in road and airport concessions, energy and real estate into a single vehicle that he hopes to list on the New York Stock Exchange.

Analysts said an offer on Argos itself could also be in Gilinski’s plans, and the public offers could also be the first step for him to recover a lost asset – Bancolombia bank.

Grupo Gilinski sold the bank, then called Banco de Colombia, to GEA in 1997. A dispute over how the payment was made led to more than a decade of civil lawsuits, which eventually ended in 2010 with a agreement between the two companies.

Two brokers who spoke to Grupo Gilinski’s public offering staff told Reuters on condition of anonymity that while Gilinski’s primary goal is to accumulate stakes in GEA companies, his desire to reach Bancolombia via Grupo SURA’s offer is obvious.

“When you listen to them, the hostile tone is noticeable … they are running after all,” said a broker involved in the Nutresa offer. “If Gilinski manages to buy, he will be in the group and in the future he can opt for Bancolombia.”

Grupo SURA owns around 46% of Bancolombia shares.

Bancolombia did not comment.

(Reporting by Nelson Bocanegra; writing by Julia Symmes Cobb; editing by Nick Zieminski)

By Nelson Bocanegra

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