Selling Banamex on the Stock Market: the other option for Citigroup

How does an OPA work?

OPAs are made when a company seeks to buy the shares that third parties have and that are on the stock market. For this to happen, the company must be listed on the Mexican Stock Exchange (BMV).

Banamex is not, its shares were canceled years ago.

“A takeover bid occurs when the shares of a company are listed on the market, for example, an institutional investor wants to have a greater participation and seeks to buy more shares,” explains Carlos Aréchiga, a specialist in financial markets at the Escuela Bancaria Comercial (EBC).

In order for Banamex to be able to sell in an OPA, it would first need to make an Initial Public Offering (OPI) that places its shares on the market, and then make the acquisition.

“The first placement of that share on the Stock Market is the IPO and a company does it when it requires money to continue growing without credit,” added the EBC specialist.

In an IPO, the company can put, for example, 25% of the shares on the stock market while and a few years later buy back those shares or increase that percentage.

When less than 30% of the shares are purchased on the market, the operation is known as a Voluntary Acquisition Offer.

In which cases should a takeover bid be made?

For the seller, the option of a takeover bid may not be very attractive because the behavior of the market has been volatile and bearish, but for future shareholders this may be a good opportunity to buy cheap shares.

Analysts have indicated that Citigroup could obtain close to 12,000 million dollars from the sale of Banamex, a figure that seems complicated for Grupo México or Banca Mifel, who would offer a lower price than the one sought by the US bank.

Citi acquired the Mexican bank for $12.5 billion in 2001.

Do OPAs pay taxes?

Aréchiga adds that in a takeover bid what pays taxes are the profits from the operation, that is, if a share went public for 20 pesos and is quoted some time later at 25 pesos, taxes are paid for those 5 pesos.

“When you are in an IPO, you pay taxes or commissions to the Mexican Stock Exchange, to Indeval (which is the clearinghouse), to the structuring agents and to the placement agent.