Generations of Colombian children learned their animals by collecting pictures of exotic beasts given away in the wrappers of the local Jet chocolate bars. Now the firm which makes the iconic national sweet may itself fall prey to a passing lion.
A $3.4bn brace of hostile all-cash bids from one of the country’s biggest business beasts, banking billionaire Jaime Gilinski, have jolted Colombia’s slumbering bourse into action.
The shockwaves have reverberated beyond Colombia, raising questions about corporate activism which are common in the US but rare in Latin America, where family-controlled conglomerates often rule the roost.
A Harvard Business School graduate, Gilinski, 64, began his career as an mergers and acquisitions banker at Morgan Stanley before building an empire of financial and property assets worth nearly $4bn. His assets include a stake in Metro Bank in the UK, as well as a big real estate development in Panama and Banco GNB Sudameris, which operates in Colombia, Peru and Paraguay.
Gilinski’s launched a $2.2bn hostile offer last month for up to 62.6 per cent of Nutresa, Colombia’s biggest food group and maker of the Jet chocolate. Abu Dhabi’s Royal Group joined him as a minority partner to add financial muscle. The offer is at a 40 per cent premium to Nutresa’s pre-bid price.
Less than three weeks later, Gilinski swooped again, announcing a $1.2bn bid for up to 31.7 per cent of Grupo Sura, the country’s biggest holding group with interests in banking, insurance and pensions.
“These are two companies which have not performed for shareholders over the last 10 years,” Gilinski told the Financial Times. “In the case of Sura, the share price has fallen 75 per cent in dollar terms and in the case of Nutresa it has gone down 52 per cent [up to November 10, when the Nutresa bid was launched]. We have offered a very significant premium”.
Gilinki’s targets are carefully chosen. Sura and Nutresa are connected by a web of cross-shareholdings covering them and a third major Colombian corporation, the cement and infrastructure concern Grupo Argos.
Known as the “Grupo Empresarial Antioqueño” (GEA), the structure was devised in 1979 by executives in Colombia’s business capital MedellÃn to fend off predators from Bogotá.
If it succeeds, Gilinski’s audacious raid could turn the cross-shareholdings into a weapon against the incumbent management. Should he win Nutresa, he gains the company’s stake in Sura. If he takes Sura, a big stake in Nutresa comes with it. Argos owns large slices of other two companies.
Gilinski says he is not planning a bid for Argos at this point but this has not stopped speculation that his ultimate aim is to pounce on all three key members of the GEA family.
The MedellÃn-based consortium is fighting back. Argos says it will not sell its Sura and Nutresa shares to Gilinski, citing an unpublished valuation which it says is much higher. Sura has also rejected Gilinski’s bid for its Nutresa shares. The incumbent management believes Gilinski’s bid undervalues Nutresa and Sura and threatens GEA’s model of long-term ownership via thousands of smaller shareholders. It is open to bringing in an outside minority partner to boost value, however.
The citizens of MedellÃn have joined the battle. WhatsApp groups paint the bids as an attempt at asset-stripping which would hurt companies with strong local commitment and high ratings on environmental, social and governance issues.
“There is truth in the argument that GEA has a vision which goes beyond the balance sheet of the companies,” says Mauricio Cárdenas, a former Colombian finance minister and visiting professor at Columbia University. “It . . . is very committed to social, regional and national causes.”
Gilinski insists that he will be a good steward of his targets. “In both cases I want influence on the board of directors to redirect them and really help to generate value for shareholders,” he said.
The billionaire’s actions have won plaudits in the region’s financial community as a signal that company managements more broadly face pressure. “I personally like Gilinski’s move,” said one senior Latin American banker. “In general I think Latin American companies are not well managed.”
Whether or not Gilinski wins his prey, the GEA is likely to become a different beast. “The good thing is that this will shake things up,” Cárdenas said. “You have to applaud the bids. They will change the status quo.”
michael.stott@ft.com
Billionaire Jaime Gilinski jolts Colombian business with brace of bids
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