11/02/12, 22:33:28 EST

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Investment groups in bidding war for Mexican airline Aeromexico

iht.com

The government agency that owns a stake in Aeromexico, one of Mexico's largest airlines, said Tuesday it would accept an investment group's takeover bid of up to US$206 million (€146 million) if it does not receive a better offer by Wednesday afternoon.

The deposit insurance agency IPAB, which owns a stake in Consorcio Aeromexico SAB, issued the statement following a bidding war between the investment group, which includes Citigroup Inc.'s Banamex unit, and a father-son business team.

The bidding war heated up earlier Tuesday after IPAB announced it would accept Alberto Saba Raffoul and Moises Saba Masri's bid of 1.84 billion pesos (US$170 million; €120 million), or nearly 1.86 pesos (US$.17; €.12) a share, for control of the carrier.

The announcement prompted the investment group to raise its bid to 1.85 billion pesos (US$171 million; €121 million), or nearly 1.87 pesos (US$.17; €.12) a share, from 1.74 billion.

The Sabas then upped their own offer to 1.89 billion pesos (US$174 million; €123 million), or 1.90 pesos (US$.18; €.13) a share.

In a filing with the Mexican Stock Exchange, Banamex said it would not raise its share offer again. However, it tried to sweeten the deal by offering shareholders cash in lieu of tradable warrants.

The group said it will pay shareholders who opt not to take the warrants 0.3822 pesos (US$.04; €.03) a share on top of the cash offer of 1.87 pesos a share, for about 2.25 pesos (US$.21; €.15) per share, making the bid worth up to 2.2 billion pesos (US$206 million; €146 million).

In a filing with the Mexican Stock Exchange on Monday, the group said the warrants are worth US$42 million (€30 million) to US$53 million (€37 million) based on an independent valuation by N.M. Rothschild & Sons.

Its bid expires Wednesday at 5 p.m. EDT (2100 GMT).

"IPAB will consider other offers during this period," the agency said. "If no more favorable offer is received, it will proceed to accept the group's bid."

The investment group has promised to invest US$240 million (€170 million) in the carrier. The Saba family has said it plans a US$255 million (€180 million) investment.

Aeromexico and Mexico's other major carrier, Mexicana, were part of the government-owned holding company Cintra SA, which put the two carriers up for sale in 2005. The two airlines dominated domestic traffic until a number of low-cost carriers were launched in recent years, boosting competition.

The government sold Mexicana to hotel group Grupo Posadas SA, but rejected previous bids for Aeromexico as too low. The government currently owns 62 percent of Aeromexico.

Mexicana made a 2.17 billion-peso (US$200 million; €141 million) bid for Aeromexico, but the commission blocked the offer last Thursday. The airline has appealed.

Aeromexico's local A shares closed up nearly 17 percent at 2.21 pesos.

 Printable Version  | published Oct 16, 2007