Citi's Banamex gets competing bid from Mexican mining tycoon

Mexican mining magnate German Larrea's Grupo Mexico SAB offered to buy full control of Citigroup's Banamex unit, attempting to upstage a deal to sell a stake to another Mexican billionaire and convert the lender into a publicly traded company.

Reviving Larrea's earlier takeover campaign that failed, Grupo Mexico said it's willing to acquire a 25% stake for a multiple of 0.85 times the lender's book value and the other 75% for 0.8 times book value, according to a securities filing Friday in Mexico. If Citigroup accepts the offer, it would be subject to regulatory approvals, Grupo Mexico said.

"This offer would place Banco Nacional de Mexico and its affiliates under the control of Grupo Mexico, with the aim of significantly boosting access to credit for families and businesses in our country," the conglomerate said in a statement.

Citigroup said the plan it announced last month to sell a stake to Fernando Chico Pardo ahead of an IPO "continues to be our preferred path." Mexican authorities confirmed they are supportive of that transaction, people familiar with the matter said, asking not to be identified discussing private talks.

The fresh offer is another twist in Citigroup's long-fraught effort to extract itself from the business. When the U.S. bank first announced its intent more than three years ago, former Mexican President Andrés Manuel López Obrador made clear that any buyer of such an important financial institution would face heavy government scrutiny. Larrea got close in a previous attempt to buy Banamex, but ultimately backed away when Lopez Obrador's administration seized one of his railroad assets and he spoke about a government stake in Banamex.

Larrea's family fortune is worth around $55 billion, Latin America's second biggest behind Carlos Slim. The reclusive billionaire controls mining assets across the Americas, as well as railroads, malls and cinemas in Mexico. He had sought to include Banamex, with its long history and collection of art and real estate, within his conglomerate even though the bid had weighed on the stock price, with investors preferring a pure mining play.

Chico Pardo, who ran Slim's bank in the 1990s, agreed last month to acquire a 25% stake in Banamex for about 42 billion pesos ($2.28 billion).

Citigroup Chief Executive Officer Jane Fraser met multiple times with Lopez Obrador's successor and protege Claudia Sheinbaum before announcing that deal, a signal that the plan had won favor with the new president. Larrea's unsolicited reentry into the bidding introduces an element of chaos into what had been an orderly process.

"We remain committed to realizing the full value of Banamex for our shareholders," Citigroup said in its statement Friday, noting that it had yet to formally receive the new bid. "If an offer is presented by Grupo Mexico, we will of course review it in a responsible manner and consider, among other risk factors, the ability to obtain required regulatory approvals and the certainty of closing a proposed transaction."

Grupo Mexico left the door open for Chico Pardo to acquire the 25% stake, saying its proposal would then be to acquire the remaining 75%. The conglomerate also suggested part of Banamex could be sold to the nation's pension funds.

Assuming the terms are similar, Larrea's offer would value the company slightly higher than the roughly $9 billion implied by Chico Pardo's bid.

Representatives for Chico Pardo had no immediate comment, and Sheinbaum's office didn't immediately reply to messages.