As expected by the market, the boards of directors of the Nutresa and Argos groups, on behalf of the shareholders of both organizations, decided yesterday not to participate in the public offer for the acquisition of shares (opa) that the Gilinski family launched at the end of last year on the shares of Grupo Sura, of which they aspire to buy between the 25.344 and 31.68 percent, at a rate of $ 8.01 per share.
(You can also read: Groups Nutresa and Argos say no to the takeover that Gilinski launched on G. Sura)
In an interview with EL TIEMPO, the president of Grupo Argos, Jorge Mario Velasquez, explained the reasons for this decision and the plans they will carry out to maximize the value for Sura’s shareholders.
Why did you decide not to participate in the takeover of the ordinary shares of Grupo Sura and who advised you?
The board of directors decided, unanimously, not to participate in the takeover bid. This occurred following a very judicious analysis supported by JP Morgan, one of the world’s leading banks, where following the methodology of discounted free cash flow, cash flow from dividends and multiples of transactions and companies at the regional level and Overall, it was concluded that the value offered is substantially lower than the fundamental value of the company.
If the price of $ 8.01 per common share of Grupo Sura does not recognize the fundamental value, what then do you think the fair price would be?
I think you have to understand two elements. The first is that the vision of each shareholder and investor on a share is different. In addition, it must be considered that this is information that will be kept confidential, taking into account the announcements made by the Sura Group to seek strategic partners who can come to the shareholders of the company in an open and competitive process. What I can say is that the price per share established in the takeover bid is equivalent to a multiple of the Price / Book Value of 0.68 times, which compared to other transactions in the sectors in which Grupo Sura participates in Latin America, whose average in the last 10 years has been above 2 times, evidence that the offer does not recognize the value of Grupo Sura. That gives you a taste of how undervalued the offer is.
Why is the issue of sustainability so important for making this decision and what makes you think that with the eventual arrival of the Gilinski it would not be maintained?
The Gilinski family are respectable businessmen who have invested in the country over time, so I do not want to make any disqualifying reference. What I can affirm is that an action like the one that Grupo Sura has or its own generated by Grupo Argos by worrying regarding building a balance that positively impacts not only shareholders but also suppliers, customers, collaborators, value chains and society in general is an enabler that results in greater reliability, in the durability of businesses and, therefore, in the real sustainability of the company.
(Read also: Next Tuesday the tender ends with which Gilinski seeks a minimum of 25.3% of Sura)
What initiatives are you going to carry out to accelerate the value of Grupo Sura and thus close the gaps between the fundamental value of the businesses and what the stock market reflects today?
We have been generating analysis for the possible listing and linking of strategic partners that come to accompany the Sura Group, to your insurance or asset management business. The second measure is to revise the dividend policy in favor of the shareholders so that in a balanced way between the cash flow that must be maintained to invest and grow, but also to deleverage the business, it can improve the return via dividends to the shareholders. And continue supporting through the different corporate governance mechanisms all those initiatives that have to do with digitization and greater efficiency.
We have been generating analysis for the possible listing and linking of strategic partners that come to accompany Grupo Sura, its insurance or asset management business
Where would they be interested in listing the stocks?
There are several possibilities. It will be defined once there is a detailed study of the cost / benefit of each of the alternatives but, in general, the New York Stock Exchange is a sufficiently large market that it has advantages in that sense.
Why are they open to the arrival of another strategic partner, are they not open to the participation of the Gilinski group?
I would say that any investor can participate in an opa, so we don’t want to rate a particular investor on that at all. The reasons why we have decided not to participate have to do with the undervaluation of the offer with respect to the fundamental value of the businesses. What we also say is that in an open process we are going to look for those who have the ability to offer the fundamental values of the companies, have a long-term vision and sustainability.
If it had not been Gilinski but another investor who had launched the takeover, do you think the answer would have been the same?
It would have been exactly the same.
(Continue reading: Less than 10 days to know the results of takeover bids for Sura and Nutresa groups)
What do you think of the possibility that the Gilinski Group decides to release the minimum acceptances of its offers and thus access the positions of the Board of Directors?
I respect the decision that the bidder makes in this case. In the booklets, the Gilinski family reserves the right to release the caps, it is a decision they can make. We are absolutely respectful of the regulations that govern in Colombia and the dynamics of the capital market. If they decide to take one action, one million or three million shares. That is the dynamics of the capital market.
What do you think will happen, finally, will it be successful?
It is difficult to predict what will happen. The decision is independent, autonomous from each of the shareholders, there are different types of shareholders. Just say that the plans that the company has established in the long term are credible, that they aim at the preference of value for its shareholders, so that each one will make the decision that seems best to them. In particular, I believe that the path to valorization is very important.
The long-term plans the company has put in place are credible. Their objective is the preference of value to their shareholders, so that each one will make the decision that seems best to them.
They also have concerns regarding the bidder obtaining various regulatory clearances. What has the Superfinanciera told you?
There is no fear, what has occurred is the request to the Superfinancial to inform us in a timely manner of the actions that are required. We don’t have the answer yet, but we hope there is. In the case of Grupo Sura, as it is a supervised entity in the financial sector that has specific authorizations and we also have concerns regarding the overlap of the two takeovers simultaneously. In Colombia, there is an express prohibition once morest indirectly buying shares of the company that is the object of that takeover during the period of a takeover bid and given the nature of these companies where Sura is a Nutresa shareholder and there is a simultaneous bid, to the extent that you buy a share of Grupo Sura at the same time you are indirectly buying a share of Grupo Sura.
They also announced that a dividend of 500 pesos per share will be proposed at the next Shareholders’ Meeting, which corresponds to an increase of more than 30 percent. For what is this?
To the good projections of the businesses that we have had. We are going to have 2021 with very significant growth in all Grupo Argos businesses, and the outlook for 2022 also shows a positive behavior for the company in the way of transferring the value of our businesses to our shareholders.
(Read also: Cárdenas analyzes what to evaluate to enter or not to bid)
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