Larrea Bows Out After Citi Rejection in Banamex ‘Telenovela’

(Bloomberg) -- Mining magnate German Larrea’s conglomerate, Grupo Mexico SAB, said it accepts Citigroup Inc.’s decision to reject its $9.3 billion offer for the US bank’s Grupo Financiero Banamex business.

“Grupo Mexico respects Citi’s determination and wishes it success in the transaction it has opted for and in the fate it has chosen for Banamex,” the company said in a statement Friday, adding that it hopes the move “will result in stability and growth for the Mexican financial sector.”

Citi said on Thursday it would stick with its decision last month to sell a 25% stake to billionaire Fernando Chico Pardo as part of a plan to list the asset publicly. Grupo Mexico made a surprise offer late last week to acquire all of Banamex.

Grupo Mexico said its offer was at “a superior price” that “maximized the benefit for Citi shareholders” and “ensured Banamex’s repositioning as a leading Mexican bank capable of providing a significant boost to our country’s economy.”

Larrea, who controls Latin America’s second-biggest fortune behind Carlos Slim, had emerged as the front-runner to acquire Banamex in late 2022, but talks with Citi fell apart in 2023 amid interference by then-President Andres Manuel Lopez Obrador. Citi said in its statement Thursday that it saw greater certainty in its deal with Chico Pardo. 

Shares of Grupo Mexico gained around 2% in morning trading in Mexico City on Friday, rising for a fourth straight day as they clawed their way back from a more than 15% plunge on Monday, their biggest drop since 2008. Larrea’s bid raised concern about how the billionaire would allocate some $9 billion in cash held by Grupo Mexico.

Even with Friday’s gains, the stock was headed for a more than 8% loss for the week. That wiped nearly $3.8 billion from to Larrea’s family fortune as of 9:00 AM in Mexico City, according to the Bloomberg Billionaires Index. Larrea’s net worth had been at an all-time high of $55.5 billion at the start of the week.

Analysts at Jefferies Financial Group Inc. said in a note that they wouldn’t rule out further attempts by Grupo Mexico to go after Banamex, saying the episode echoed Larrea’s “drawn out, and ultimately unsuccessful, pursuit” of Mexican airport operator Grupo Aeroportuario del Pacifico. 

Rodolfo Ramos, a strategist at Bradesco BBI, was also skeptical that Larrea has given up on finding a way to take a stake in Banamex or the banking industry. 

“We have been talking about Grupo Mexico and Banamex for years, and there is clear appetite from Larrea to venture into the industry,” Ramos wrote. “While chances are lower today than they were a week ago, we would be surprised if this is the end to this telenovela.”

--With assistance from Dylan Sloan.

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