Tomorrow, Monday, May 16, the acceptance period for Nutresa’s third Public Acquisition Offer (OPA) ends. Given the refusal of Sura and Argos to sell their shares, it is most likely that the takeover bid will not be successful. On Friday the 13th, Nutresa shares closed at 49,590 pesos, giving the food conglomerate a market value of nearly 23 billion pesos.
The company valuewhich includes the company’s net debt, amounts to 26 billion pesos. Although the offer represents a multiple of more than 17 times the EBITDA of 2021, and around 16 times the EBITDA of the last 12 months (including the first quarter of this year), the directors of the GEA found it insufficient. This, taking into account that comparables in the region such as Bimbo de México, which is six times larger than Nutresa, trades at seven times the EBITDA.
Alicorp, Peru’s leading food company, is valued at six times its EBITDA. The truth is that, until now, the GEA has been unable to obtain a competitive takeover bid for Nutresa. It failed in the first takeover bid at US$7.71 per share, nor in the second at US$10.48, nor in the latter, at US$12.58.
The directors of the GEA have repeatedly said that they do not act as a group. On December 17 of last year, already being in OPA, Nutresa announced that “the Board of Directors instructed the administration to study in a comprehensive manner, with the support of its independent financial, legal and strategic advisors, a process of linking partners strategic to the company.”
A few weeks later, the day before the date of acceptance of the first takeover bid, GEA directors publicly said: “The arrival of a new strategic partner to Grupo Nutresa would take place through a takeover bid.” They went further and assured: “In the case of Nutresa, the search is being carried out for a partner that can pay a value for the share that is much closer to the fundamentalin such a way that it benefits all holders of titles and that it is carried out through an agreed takeover bid that may allow them to participate in it, this taking into account that the real value is much higher than what is being offered today”.
Five months have passed and the market has not heard from this strategic partner who was going to enter and pay more than the fundamental values. Clearly, the GEA directors continue to insist that Nutresa is worth much more than US$12.58 per share. It is necessary to start from good faith and believe that the communications to the public and the declarations of the GEA administrators are true.and not an effort to hinder OPAs (such as giving those declarations one day before the acceptance date) or to act in a group to benefit administrators or certain shareholders.
If this is the case, a new offer could be expected from a strategic partner that is willing to pay much more than US$12.58 per share for Nutresa. That is, much more than 27 billion, including debt, by the food conglomerate. Based on the communiqués and public statements, the directors of the GEA have induced people and investors to buy Nutresa shares.
If we believe them, and we have no reason to doubt their good faith, buying the Nutresa share at 51,500 pesos (value of the rejected takeover bid) would be a gift. Now that Nutresa leaves the passivity law, the directors of the GEA are expected to show their cards. They have said they would bring in a strategic partner well above “core value” that benefits all shareholders.
Clearly, that’s well above 51,500 pesos a share. They will not now be able to blame inflation, high interest rates (public debt securities that exceed 11% and the entire market expects short-term rates to continue rising), the situation in international markets, or electoral risks in Colombia. That all is known. And with these inputs they made an informed decision and rejected the offer, valuing Nutresa at 27 billion pesos.
More than five months have passed since they announced the search for a strategic partner. They can’t say no now. If the directors of the GEA are telling the truth and acting in an ethical and legal manner, there is no reason to doubt it; Nutresa shareholders should receive an offer at very high values. Having taken the risk of rejecting this latest takeover bid, without knowing that they can keep their promises, is something that serious administrators like those of the GEA would not do..
*Gabriel Gilinski is a shareholder of Publicaciones Semana